Legislature(2015 - 2016)BARNES 124

01/26/2015 03:15 PM LABOR & COMMERCE

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Audio Topic
03:16:10 PM Start
03:16:51 PM Overview: Department of Commerce & Economic Development by Fred Parady, Acting Commissioner
04:30:40 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overview: TELECONFERENCED
Dept. of Commerce, Community & Economic
Development, Commissioner Parady
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                        January 26, 2015                                                                                        
                           3:16 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kurt Olson, Chair                                                                                                
Representative Shelley Hughes, Vice Chair                                                                                       
Representative Jim Colver                                                                                                       
Representative Gabrielle LeDoux                                                                                                 
Representative Cathy Tilton                                                                                                     
Representative Andy Josephson                                                                                                   
Representative Sam Kito                                                                                                         
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mike Chenault (alternate)                                                                                        
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
OVERVIEW:  DEPARTMENT OF COMMERCE & ECONOMIC DEVELOPMENT BY FRED                                                                
PARADY~ ACTING COMMISSIONER                                                                                                     
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
FRED PARADY, Acting Commissioner                                                                                                
Office of the Commissioner                                                                                                      
Department of Commerce, Community & Economic Development (DCCED)                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified and answered questions during the                                                              
overview of the Department of Commerce, Community & Economic                                                                    
Development.                                                                                                                    
                                                                                                                                
LAWRENCE BLOOD, Acting Director                                                                                                 
Division of Community and Regional Affairs (DCRA)                                                                               
Department of Commerce, Community & Economic Development (DCCED)                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions during the overview of                                                                
the Department of Commerce, Community & Economic Development.                                                                   
                                                                                                                                
KEVIN ANSELM, Director                                                                                                          
Division of Banking and Securities                                                                                              
Department of Commerce, Community & Economic Development (DCCED)                                                                
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified and  answered questions during the                                                             
overview of the Division of Banking and Securities.                                                                             
                                                                                                                                
SARA CHAMBERS, Acting Director                                                                                                  
Professional Licensing                                                                                                          
Division of Corporations, Business, and Professional Licensing                                                                  
Juneau Office                                                                                                                   
Department of Commerce, Community & Economic Development (DCCED)                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified and  answered questions during the                                                             
overview  of   the  Division  of  Corporations,   Professional  &                                                               
Occupational Licensing.                                                                                                         
                                                                                                                                
LORI WING-HEIER, Director                                                                                                       
Division of Insurance                                                                                                           
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified and  answered questions during the                                                             
overview of the Division of Insurance.                                                                                          
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:16:10 PM                                                                                                                    
                                                                                                                                
CHAIR KURT  OLSON called  the House  Labor and  Commerce Standing                                                             
Committee meeting to  order at 3:16 p.m.  Present  at the call to                                                               
order  were Representative  Hughes, Tilton,  Josephson, Kito  and                                                               
Olson.  Representatives Colver and  LeDoux arrived as the meeting                                                               
was in progress.                                                                                                                
                                                                                                                                
^OVERVIEW:   DEPARTMENT  OF COMMERCE  &  ECONOMIC DEVELOPMENT  BY                                                               
FRED PARADY, ACTING COMMISSIONER                                                                                                
 OVERVIEW:  DEPARTMENT OF COMMERCE & ECONOMIC DEVELOPMENT BY FRED                                                           
                  PARADY, ACTING COMMISSIONER                                                                               
                                                                                                                              
3:16:51 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that the  only order of business  would be                                                               
an overview by  the Department of Commerce,  Community & Economic                                                               
Development by Acting Commissioner Parady.                                                                                      
                                                                                                                                
3:17:11 PM                                                                                                                    
                                                                                                                                
FRED  PARADY, Acting  Commissioner, Office  of the  Commissioner,                                                               
Department   of  Commerce,   Community  &   Economic  Development                                                               
(DCCED), stated  that Governor Walker has  named the commissioner                                                               
designee; however,  he will continue  as acting  commissioner for                                                               
the next month to  allow for moving time.  He  will remain in the                                                               
DCCED  as  the  deputy commissioner  once  Commissioner  Designee                                                               
Chris Hladick arrives, he said.                                                                                                 
                                                                                                                                
3:18:39 PM                                                                                                                    
                                                                                                                                
ACTING COMMISSIONER  PARADY began his PowerPoint  overview of the                                                               
department  by   directing  attention   to  a  snapshot   of  the                                                               
department organization  [slide 2].   The department  consists of                                                               
six   organizations:      Administrative  Services,   Banking   &                                                               
Securities, Community &  Regional Affairs, Corporations, Business                                                               
&  Professional Licensing,  Economic Development,  and Insurance.                                                               
Seven corporate entities are housed  in the organization:  Alaska                                                               
Energy Authority, Alaska  Gasline Development Corporation, Alaska                                                               
Industrial  Development  and  Export Authority,  Alaska  Railroad                                                               
Corporation  (ARRC), Alaska  Seafood Marketing  Institute (ASMI),                                                               
Alcoholic Beverage Control Board  (ABC Board), and the Regulatory                                                               
Commission of  Alaska (RCA).   He relayed  that DCCED's  staff is                                                               
comprised  of  576  fulltime,  one   part-time,  and  eight  non-                                                               
permanent  positions, excluding  the ARRC,  which is  exempt from                                                               
the  [State Procurement  code and  application  of the  Executive                                                               
Budget Act].                                                                                                                    
                                                                                                                                
3:19:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COLVER asked  for a  geographic breakdown  of the                                                               
576 staff.                                                                                                                      
                                                                                                                                
ACTING  COMMISSIONER  PARADY  offered  to  provide  them  to  the                                                               
committee.                                                                                                                      
                                                                                                                                
3:20:20 PM                                                                                                                    
                                                                                                                                
ACTING   COMMISSIONER   PARADY    answered   that   the   funding                                                               
distribution is  approximate 59 percent corporate  and 41 percent                                                               
core  funding  [slide 3].    Of  the  $127 million  in  corporate                                                               
funding,  roughly  $40 million  is  the  Power Cost  Equalization                                                               
Fund, he said.   Thus, roughly one-third of  the corporate entity                                                               
funds are Power Cost Equalization funds.                                                                                        
                                                                                                                                
ACTING COMMISSIONER  PARADY directed  attention to the  budget by                                                               
the core  services the department  provides [slide 4].   Consumer                                                               
protection at  17 percent economic  growth at 29  percent, strong                                                               
communities at 14  percent, and affordable energy  at 40 percent.                                                               
Again,   within   the   affordable  energy   component.      Thus                                                               
approximately  $41   million  is  for  power   cost  equalization                                                               
distributions, he said.                                                                                                         
                                                                                                                                
3:21:11 PM                                                                                                                    
                                                                                                                                
ACTING COMMISSIONER  PARADY, turned  to the Division  of Economic                                                               
Development, Alaska Industrial  Development and Export Authority,                                                               
and  the Alaska  Seafood Marketing  Institute, which  essentially                                                               
constitute  the economic  engine  that  supports economic  growth                                                               
exclusive of gasline issues [slide  5].  The Division of Economic                                                               
Development has  issued 261  loans in  10 loan  programs totaling                                                               
$29 million, with 237 loans  issued from the Commercial Fisheries                                                               
Revolving Loan  Fund [slide 6].   He reported that a  $15 million                                                               
annual   contract  for   tourism   marketing  generated   800,000                                                               
information requests,  220,000 trips, and 700,000  visitors.  The                                                               
legislature   appropriated  $400,000   in  capital   funding  for                                                               
economic development, which  has been recommended to  be moved to                                                               
the operating  budget to more  accurately reflect the  purpose of                                                               
the  funds.   This fiscal  year, the  DCCED will  need to  absorb                                                               
those costs within the department  due to the budget constraints,                                                               
he  said,   noting  these  funds  essentially   support  economic                                                               
development outside of tourism and fisheries.                                                                                   
                                                                                                                                
3:22:43 PM                                                                                                                    
                                                                                                                                
ACTING  COMMISSIONER  PARADY  related that  the  Alaska  Maritime                                                               
Industrial  support  sector  analysis  provides  details  on  the                                                               
replacement  of  the  commercial  fishing  fleet.    This  sector                                                               
considers ways to enhance Alaska  based shipyards, determines the                                                               
age of the  fleet, the schedule for capital  replacement, and how                                                               
the  state  can  support  these   activities.    In  response  to                                                               
Representative  Hughes,  he  clarified   that  $400,000  goes  to                                                               
economic  development outside  of  tourism  and fisheries,  which                                                               
will  be  transferred  to  the  operating  budget.    He  further                                                               
answered that  the $400,000 provided  funding for the  report, in                                                               
collaboration  with  the  University  of Alaska,  on  drones  and                                                               
development  and  research on  drones  in  the  state.   It  also                                                               
provides  funding for  the annual  Minerals Commission  report to                                                               
the  legislature and  for other  economic activities  outside the                                                               
core of tourism and fisheries.                                                                                                  
                                                                                                                                
3:24:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE COLVER, referring to the  third bullet on slide 6,                                                               
asked  about source  of  funding for  tourism  marketing and  the                                                               
allocation of those funds.                                                                                                      
                                                                                                                                
ACTING COMMISSIONER PARADY answered  that the legislature created                                                               
the Alaska  Tourism Marketing Board  (ATMB) so the  [ATIA] Alaska                                                               
Travel Industry Association is no  longer the direct recipient to                                                               
those funds.   The newly constituted ATMB held  its first meeting                                                               
in January  2015 and is  the conduit  for roughly $15  million in                                                               
general  fund   [GF]  appropriations   to  support   the  tourism                                                               
industry.                                                                                                                       
                                                                                                                                
3:24:57 PM                                                                                                                    
                                                                                                                                
ACTING COMMISSIONER  PARADY reported  that the  Alaska Industrial                                                               
Development  and  Export  Authority (AIDEA)  is  essentially  the                                                               
"financing arm" of  the state [slide 7].  AIDEA's  FY 16 dividend                                                               
was declared  at the  last board  meeting totaling  $17.6 million                                                               
and AIDEA's assets total $1.4 billion.   The AIDEA owns a variety                                                               
of entities,  such as  the road  from Red Dog  mine to  the port.                                                               
Nearly  $700  million  in  private  sector  investment  has  been                                                               
leveraged  by   the  investment   in  AIDEA,  he   related,  with                                                               
projections that  these investments  will create or  retain 1,500                                                               
construction  jobs and  over  1,000 permanent  jobs.   The  first                                                               
phase  of the  Mustang  Oil Field  development  project has  been                                                               
completed and the board recently  approved the second phase.  The                                                               
board  has  been  actively  working   on  Governor  Walker's  new                                                               
directions on the Interior Energy project.                                                                                      
                                                                                                                                
3:26:09 PM                                                                                                                    
                                                                                                                                
ACTING  COMMISSIONER  PARADY  reported that  the  Alaska  Seafood                                                               
Marketing Institute (ASMI) has worked  diligently to increase the                                                               
export value of  fisheries, which has increased by  85 percent to                                                               
$3.2 billion  in ten years [slide  8].  He directed  attention to                                                               
the second  bullet, noting the Marine  Stewardship Council (MSC),                                                               
a   third-party  procurement   organization,  has   been  working                                                               
tirelessly  to create  a Responsible  Fisheries Management  [RFM)                                                               
initiative  and  a  State of  Alaska  "Certified  as  Responsible                                                               
Fisheries" program.   When the MSC certified  the Russian pollock                                                               
industry,  it  dramatically  decreased   the  value  of  Alaska's                                                               
pollock  catch.   With the  RFM  initiative, the  state hopes  to                                                               
reassure  major  supply  chain   procurement  entities,  such  as                                                               
Walmart,  of the  sustainability  of  Alaska's fisheries  without                                                               
relying  on  a  third  party  with an  independent  agenda.    He                                                               
characterized  this  as  providing  an  ongoing  and  substantial                                                               
strategic interest to  our fisheries industry.   He reported that                                                               
the  fisheries industry  is the  number one  employer in  Alaska,                                                               
providing  63,100 jobs.   This  industry assesses  itself with  a                                                               
voluntary fish tax based on  .5 percent of ex-vessel value, which                                                               
generates approximate $12 million of  the operating funds for the                                                               
ASMI.                                                                                                                           
                                                                                                                                
3:27:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX asked  for  further  clarification on  the                                                               
voluntary fish tax.                                                                                                             
                                                                                                                                
ACTING  COMMISSIONER  PARADY  answered   that  the  industry  has                                                               
created an  assessment, currently set at  .5, which can be  up to                                                               
.6 of the ex-vessel value,  which currently generates approximate                                                               
$12 million in revenues.                                                                                                        
                                                                                                                                
REPRESENTATIVE LEDOUX asked whether the industry voted on it.                                                                   
                                                                                                                                
ACTING COMMISSIONER  PARADY was uncertain  of the details  of how                                                               
the fish  tax was initially  created, but offered to  provide the                                                               
answer and statutory reference to the committee.                                                                                
                                                                                                                                
3:28:34 PM                                                                                                                    
                                                                                                                                
ACTING  COMMISSIONER  PARADY  directed  attention  to  affordable                                                               
energy and a discussion of  the Alaska Energy Authority (AEA) and                                                               
Alaska  Gasline Development  Corporation  (AGDC) [slide  9].   He                                                               
related AEA's mission:   to reduce the cost of  energy in Alaska,                                                               
with  a goal  of 50  percent electrical  generation by  2025 from                                                               
renewable energy  sources; and  the AGDC's  mission:   to advance                                                               
the  in-state natural  gas pipeline.   He  reported that  AEA has                                                               
disbursed  nearly $40  million  through  power cost  equalization                                                               
grant payments to 188 communities in  FY 14 with completion of 53                                                               
of  114  rural power  system  upgrades  and funding  22  projects                                                               
through the  Emerging Energy  Technology Fund  (EETF).   He noted                                                               
many  of  these projects  offer  a  combination of  diesel,  wind                                                               
power,  and hybrid  power supply  systems for  rural Alaska.   He                                                               
projected the 2016 annual fuel  savings from the Renewable Energy                                                               
Fund at 20 million gallons of diesel equivalent.                                                                                
                                                                                                                                
3:29:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE COLVER asked what  funding is available for energy                                                               
upgrades  to  the Emerging  Energy  Technology  Fund to  complete                                                               
additional projects this year.                                                                                                  
                                                                                                                                
ACTING COMMISSIONER  PARADY offered  to provide a  spreadsheet of                                                               
those figures to the committee.                                                                                                 
                                                                                                                                
3:30:16 PM                                                                                                                    
                                                                                                                                
ACTING COMMISSIONER PARADY next  directed attention to the Alaska                                                               
Gasline Development Corporation  (AGDC).  The AGDC  has worked to                                                               
establish   its   alignment   with   administrative   directives,                                                               
specifically  to  synchronize the  timing  of  the AKLNG  [Alaska                                                               
Liquefied  Natural Gas]  and ASAP  [Alaska Stand  Alone Pipeline]                                                               
project  [slide  11].   The  ASAP  class  3 cost  estimates  were                                                               
prepared,  with burner  tip estimates  for  Fairbanks at  $11.50-                                                               
$14.50 and  in Anchorage at  $11.50-$14.50, noting  these figures                                                               
are estimates  (+/-) plus or minus  20 percent.  He  offered that                                                               
the critical need for energy  in the Interior remains a challenge                                                               
today.                                                                                                                          
                                                                                                                                
3:30:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX asked for  clarification on the term burner                                                               
tip estimate.                                                                                                                   
                                                                                                                                
ACTING COMMISSIONER  PARADY replied that the  burner tip estimate                                                               
is the  full cost of delivering  fuel to the burner  tip, whether                                                               
it is in a utility or a home.                                                                                                   
                                                                                                                                
CHAIR  OLSON,  in  further  response  to  Representative  LeDoux,                                                               
interjected that it is the point where the gas is ignited.                                                                      
                                                                                                                                
ACTING COMMISSIONER PARADY added it  is the point where the pilot                                                               
light or gas ignition point is located.                                                                                         
                                                                                                                                
3:32:05 PM                                                                                                                    
                                                                                                                                
ACTING COMMISSIONER PARADY directed  attention to the Division of                                                               
Community and  Regional Affairs (DCRA)  [slides 12-13].   He said                                                               
on his  first day of  work in  the department his  staff referred                                                               
him to  Article 10 Section  14 of the Alaska  Constitution, which                                                               
states the department shall advise  and assist local governments.                                                               
He  appreciated  having  the  mission   anchored  in  the  Alaska                                                               
Constitution since  it helps  focus this  division's work.   This                                                               
division delivers  services to local government,  he said, having                                                               
placed substantial  effort into  capacity building  and providing                                                               
technical  assistance to  over 200  communities  this past  year.                                                               
The  Rural  Utilities  Business   Advisor  program  assisted  147                                                               
communities and trained nearly 200  rural utility managers.  This                                                               
represents the "nuts  and bolts" of efforts to  deliver power and                                                               
heat  to rural  Alaska.   The Local  Boundary Commission  is also                                                               
located  within DCRA,  and approved  the Edna  Bay incorporation,                                                               
creating  Alaska's  first  new  city  in  10  years.    The  DCRA                                                               
distributed over  $85 million to 307  communities through revenue                                                               
sharing, payment in lieu of  taxes (PILT), and other programs, he                                                               
said.                                                                                                                           
                                                                                                                                
ACTING COMMISSIONER PARADY offered that  staff has worked hard to                                                               
become cross-trained  in order  to deliver  secondary information                                                               
and assistance to local governments.   He emphasized that this is                                                               
an area  of key personal interest  to him, in particular,  as the                                                               
state must consider how to  reinvent government in the context of                                                               
the  current  fiscal   crisis.    He  reported   that  the  local                                                               
government   specialists  (LGSs)   in  Nome,   Kotzebue,  Bethel,                                                               
Dillingham,  Fairbanks,  Anchorage,  and Juneau  travel  to  many                                                               
rural communities  and when these  LGSs are in a  community, they                                                               
represent the  tip of  the state's  spear.   Not only  should the                                                               
DCRA's staff  handle bulk fuel  loans and rural  utility business                                                               
assistance, but  they should  be able to  assist the  public when                                                               
problems arise with PERS [Public  Employee Retirement & Benefits]                                                               
arrearages or  other state  programs.  He  could envision  an LGS                                                               
sitting with  a city  manager placing a  call to  the appropriate                                                               
division to assist with any  issue that confronts rural Alaskans.                                                               
Cross training can  carry that assistance forward  since the real                                                               
expenses and  costs are  incurred to  travel to  the communities.                                                               
Thus  the more  completely the  department  can arm  the LGSs  to                                                               
provide  information  on  a  range  of  activities  across  state                                                               
government,  the better  service the  department can  provide, he                                                               
said.                                                                                                                           
                                                                                                                                
3:35:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE COLVER  asked whether there are  any collaborative                                                               
efforts or costs savings that can  be achieved by having the DCRA                                                               
and  AEA  combining their  efforts  to  help rural  Alaskans  and                                                               
thereby avoiding duplication of services.                                                                                       
                                                                                                                                
ACTING  COMMISSIONER  PARADY  replied   that  the  department  is                                                               
currently  reassessing the  boundary  between the  agencies.   At                                                               
this  point  AEA   has  handled  bulk  fuel   tank  projects  and                                                               
replacement  of tank  farms and  the DCCED  has handled  the bulk                                                               
fuel loan  program.   In fact,  since the DCCED  has a  Bulk Fuel                                                               
Revolving Loan  Program the agency contacted  92 communities last                                                               
fall to  assess whether  their winter  fuel supply  was adequate.                                                               
He characterized  the boundary  between the DCRA  and the  AEA as                                                               
falling  between  being  the capital  budget  and  the  operating                                                               
budget,  but opportunities  exist to  more closely  synergize the                                                               
two.                                                                                                                            
                                                                                                                                
3:37:06 PM                                                                                                                    
                                                                                                                                
LAWRENCE  BLOOD,  Acting  Director,  Division  of  Community  and                                                               
Regional  Affairs (DCRA),  Department  of  Commerce, Community  &                                                               
Economic  Development  (DCCED),  in  response  to  Representative                                                               
Colver,  added  that the  Rural  Utility  Advisor Program  builds                                                               
management  capacity  in  the communities  and  the  concepts  of                                                               
building management  capacity directly translates to  the running                                                               
and operating  of the bulk fuel  facilities.  He agreed  the DCRA                                                               
local government specialists (LGSs) work  closely with AEA in the                                                               
management of the facilities.                                                                                                   
                                                                                                                                
3:37:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COLVER  asked  if  he  had  any  suggestions  for                                                               
streamlining  or  efficiencies  that   can  be  used  to  deliver                                                               
services and  ways to better  align and define services  with the                                                               
end users.                                                                                                                      
                                                                                                                                
MR. BLOOD  answered that nothing  immediately comes to  mind, but                                                               
the   department   is   currently  reviewing   ways   to   create                                                               
efficiencies.  For  example, the Bulk Fuel Loan  program and Bulk                                                               
Fuel Bridge  Loan programs were  consolidated under DCRA  to gain                                                               
efficiencies with  one staff administering  both programs.   This                                                               
also  made  it more  convenient  for  communities since  they  no                                                               
longer must apply for a bulk  fuel loan through AEA and be denied                                                               
prior  to applying  to  the DCRA  for  a bridge  loan.   Now  one                                                               
umbrella program exists and if  a community doesn't qualify under                                                               
one   program   the   department  automatically   considers   the                                                               
application for the other program.                                                                                              
                                                                                                                                
3:39:44 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON asked whether any  monies are still being expended by                                                               
LUST, the Leaking Underground Storage Tank replacement program.                                                                 
                                                                                                                                
MR. BLOOD answered not that he was aware of any.                                                                                
                                                                                                                                
CHAIR OLSON  noted the LUST program  may not currently be  in use                                                               
but it provided  a significant amount of funds 8-10  years ago to                                                               
replace worn out underground fuel tanks.                                                                                        
                                                                                                                                
3:40:20 PM                                                                                                                    
                                                                                                                                
ACTING COMMISSIONER  PARADY directed  attention to the  Banking &                                                               
Securities  Division's   mission:     to  protect   consumers  of                                                               
financial services, promote safe  and sound financial systems and                                                               
the  Corporations, Business  & Professional  Licensing's mission:                                                               
to  ensure   competent  professional  and   regulated  commercial                                                               
services  are available  in Alaska  [slide 14].   He  highlighted                                                               
that the  division issues 67,000 professional  licenses in Alaska                                                               
in 20 programs  with board oversight and for  20 programs managed                                                               
by  the  division.     Last  year  the   legislature  also  added                                                               
behavioral analysts,  massage therapists, and contractors  to the                                                               
programs regulated  by the state.   The division  regulates those                                                               
professions under  the statutes as  laid out by  the legislature.                                                               
In rough  terms, Alaska falls in  the middle of the  pack for the                                                               
number of  professions it  regulates.   The division  also issues                                                               
50,000 business  licenses.   The department  has made  efforts to                                                               
enhance its  information technology (IT)  so as much  as possible                                                               
can be done online.                                                                                                             
                                                                                                                                
ACTING COMMISSIONER  PARADY reported the Division  of Insurance's                                                               
mission:  to regulate the  insurance industry to protect Alaska's                                                               
consumers,  and  the  Alcoholic  Beverage  Control  Board's  (ABC                                                               
Board)  mission:   to protect  the public  from alcohol  abuse by                                                               
enforcing state laws.  The  Regulatory Commission of Alaska (RCA)                                                               
is  charged with  assuring viable  utility and  pipeline services                                                               
that provide just and reasonable rates to Alaskans.                                                                             
                                                                                                                                
3:42:27 PM                                                                                                                    
                                                                                                                                
ACTING COMMISSIONER  PARADY directed attention to  the ABC Board.                                                               
In 2014,  the division issued  1,847 active liquor  licenses, 987                                                               
catering permits, and 335 special  events permits.  Since the ABC                                                               
Board  function moved  to  DCCED  in FY  13,  the department  has                                                               
worked hard  to increase its  collaboration with  other agencies.                                                               
This move was important since  the ABC Board straddles the divide                                                               
between  a   public  safety  perspective  and   a  public  health                                                               
perspective, he  said.  On  the one  hand the ABC  Board oversees                                                               
the  responsible regulation  of the  industry, but  on the  other                                                               
hand the  state experiences  unintended consequences  or negative                                                               
social implications of  the industry, too, which  means the state                                                               
must  balance  the  positive and  negative  implications  of  the                                                               
alcoholic beverage industry.                                                                                                    
                                                                                                                                
ACTING  COMMISSIONER  PARADY  related that  Cynthia  Franklin,  a                                                               
former municipal  prosecutor, currently  heads up the  ABC Board.                                                               
She brings  a prosecutorial background  and a strong  emphasis on                                                               
safety,  but also  has  a  keen awareness  of  social and  health                                                               
implications.   He  anticipated a  major rewrite  of the  alcohol                                                               
statutes  will come  before the  legislature this  session and  a                                                               
working group  of 60-70 people  has worked to craft  a reasonable                                                               
compromise  spanning an  18-month time  period.   Further, issues                                                               
related to marijuana are ongoing  in the discussion and will come                                                               
before the various legislative committees to address, he said.                                                                  
                                                                                                                                
3:44:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COLVER asked  whether  the Title  4 rewrite  will                                                               
change  the  statutory authority  and  laws  related to  the  ABC                                                               
Board.                                                                                                                          
                                                                                                                                
ACTING COMMISSIONER PARADY answered yes.                                                                                        
                                                                                                                                
REPRESENTATIVE  COLVER asked  whether the  legislature could  add                                                               
some provisions  to the aforementioned  omnibus act  to implement                                                               
the marijuana  initiative or  if it  could regulate  the emerging                                                               
industry through another  regulatory board or place  it under the                                                               
purview of the ABC Board.                                                                                                       
                                                                                                                                
ACTING  COMMISSIONER PARADY  answered yes;  that those  decisions                                                               
certainly fall under the legislature's purview.                                                                                 
                                                                                                                                
CHAIR OLSON remarked that former  director, Shirley Cote, and the                                                               
new director share similar backgrounds.                                                                                         
                                                                                                                                
3:45:17 PM                                                                                                                    
                                                                                                                                
ACTING COMMISSIONER  PARADY directed attention to  the Regulatory                                                               
Commission  of Alaska  (RCA).    The RCA  has  worked to  improve                                                               
processes  to minimize  costs to  ratepayers  and companies;  for                                                               
example, the  RCA moved to  online e-filing submittals  for major                                                               
power  utilities.    Thus,  only  one  electronic  copy  must  be                                                               
submitted to the  RCA instead of 10 paper copies.   The RCA hopes                                                               
to  extend  e-filing  options  to  smaller  rural  utilities  and                                                               
telephone companies,  he said.   The  RCA also  collaborates with                                                               
the  PCE [Power  Cost Equalization]  and the  AEA [Alaska  Energy                                                               
Authority] with  the RCA performing  calculations to  ensure that                                                               
utilities meet the  qualifications for the PCE,  noting the first                                                               
500  kilowatt  hours  going  into  a  residential  household  are                                                               
subsidized.   The RCA  continues to work  to improve  services to                                                               
its consumers, he concluded.                                                                                                    
                                                                                                                                
3:46:36 PM                                                                                                                    
                                                                                                                                
KEVIN  ANSELM,  Director,  Division of  Banking  and  Securities,                                                               
Department   of  Commerce,   Community  &   Economic  Development                                                               
(DCCED), stated that every Alaskan is  touched in some way by the                                                               
programs the  division administers.   She said consumers  may use                                                               
securities, investment  advisors and brokers, obtain  a mortgage,                                                               
or use  a money service to  wire funds or exchange  currency.  In                                                               
addition,  the  division  also   regulates  depository  and  non-                                                               
depository institutions,  including banks, credit  unions, payday                                                               
lenders, premium  finance companies, and one  business industrial                                                               
development corporation.  The Division  of Banking and Securities                                                               
is the  sole repository for ANCSA  proxy filings, she said.   She                                                               
provided statistics for the  licensure, registration, charter and                                                               
examinations  the  division  conducts,  such  that  the  division                                                               
performed over  70 examinations  during FY  14 and  oversees over                                                               
1,200 broker-dealers for 54 branch offices - noting one broker-                                                                 
dealer  is  now domiciled  in  Alaska.    She reported  that  756                                                               
investment advisors  are registered  in Alaska  in 31  offices in                                                               
Alaska, with  over 85,000 salespersons registered  to the various                                                               
securities firms; however, only  890 firms are physically located                                                               
in Alaska.   In  terms of  securities registrations  and filings,                                                               
over 5,500 mutual funds and  550 securities filings are available                                                               
in  Alaska.   She also  reported  that $13  million is  generated                                                               
annually by securities  registration and filing fees,  which is a                                                               
substantial amount of money -  generated primarily from the Lower                                                               
48.  The  division accepted over 300  ANCSA proxy-related filings                                                               
and makes  those publically available in  the division's offices,                                                               
she said.                                                                                                                       
                                                                                                                                
3:49:24 PM                                                                                                                    
                                                                                                                                
MS. ANSELM reported as of the  end of 2014, approximate 30 of 197                                                               
mortgage  brokers licensed  in Alaska,  with 37  of 185  branches                                                               
domiciled in  Alaska, and 61  of 1,389 mortgage  loan originators                                                               
licensed  in Alaska  are located  in Alaska.   The  division also                                                               
oversees  360 delegates  operating 66  money service  businesses,                                                               
with three businesses  domiciled in Alaska.  Many  of these money                                                               
service businesses  are seasonal and  work in cruise  ship ports,                                                               
primarily wiring funds, she said.                                                                                               
                                                                                                                                
MS. ANSELM related that the  division examines three state banks,                                                               
three  state  holding  companies,   and  a  mutual  savings  bank                                                               
depository  once every  18 months,  in  conjunction with  federal                                                               
regulatory  counterparts.     In  addition,  the   division  also                                                               
oversees  three trust  companies,  27  insurance premium  finance                                                               
companies, and 25  payday loan entities, of which  20 are located                                                               
in Alaska.                                                                                                                      
                                                                                                                                
3:51:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX,  referring  to the  marijuana  initiative                                                               
Alaska  voters passed  in  November,  highlighted problems  other                                                               
states, such  as Colorado and  Washington, have  experienced with                                                               
legalized marijuana.   "The banks  won't take the money  and it's                                                               
pretty  hard to  run a  business out  of paper  bags," she  said.                                                               
Bank issues  stem from  marijuana use  still being  illegal under                                                               
federal  law, with  banks operating  under federal  banking laws.                                                               
She  assumed the  same  issues  will apply  to  federal banks  in                                                               
Alaska,  but wondered  whether state  banks in  Alaska will  have                                                               
similar problems.                                                                                                               
                                                                                                                                
MS. ANSELM answered  yes; that the same problems  exist for state                                                               
banks in  Alaska because they  are regulated by the  same federal                                                               
regulations; however,  the banking marketplace that  serves firms                                                               
related  to  the  emerging marijuana  industry  has  been  moving                                                               
quickly.  Some states and  credit unions in Oregon and Washington                                                               
have  recently   expressed  a  willingness  to   provide  banking                                                               
services to the industry.  In  fact, last week one bank in Oregon                                                               
was quoted in  an Oregon newspaper as actively  courting firms in                                                               
Colorado involved  in the marijuana  business.  The  division has                                                               
been  in  close  contact  with federal  agencies,  including  the                                                               
Federal  Deposit Insurance  Corporation  (FDIC)  and the  Federal                                                               
Reserve  Bank (FRB),  to discuss  options for  Alaska's banks  as                                                               
well as  for federal  banks located  in Alaska.   She  offered to                                                               
keep the committee posted on  changes and to review the financial                                                               
reporting regulations in more detail at another time.                                                                           
                                                                                                                                
3:53:31 PM                                                                                                                    
                                                                                                                                
MS. ANSELM  directed attention  to slide  18, reporting  that the                                                               
division  collects  over  $13 million  in  fees  and  assessments                                                               
annually.   She  highlighted  changes within  the division,  such                                                               
that  the  division  has been  embracing  electronic  filing  for                                                               
certain  securities and  filings, which  provides investors  with                                                               
real time  information and  reduces paper  and postage  costs for                                                               
the industry.   In addition, the division has  gone to electronic                                                               
filings for all of its  mortgage lending, applications, and other                                                               
required filings and will continue to expand these efforts.                                                                     
                                                                                                                                
MS.  ANSELM reviewed  outreach  and  enforcement efforts,  noting                                                               
examiners participate  in public  meetings and forums  with other                                                               
government  and non-profit  partners  [slide 18].   Further,  the                                                               
division  provides  many resources  for  the  public on  its  new                                                               
website,  making   the  website   a  destination   for  obtaining                                                               
financial  information.   In  the  past  year, the  division  has                                                               
worked  closely  with  the Municipality  of  Anchorage  (MOA)  in                                                               
presenting information  to emerging entrepreneurs who  have taken                                                               
advantage  of   the  49th  State   Angel  Fund.    In   terms  of                                                               
enforcement, most  actions are taken  against those in  the Lower                                                               
48 who have  exploited Alaskans or have not  followed Alaska law.                                                               
In  FY  14,  the  division   issued  24  administrative  actions,                                                               
including 20 consent orders and  4 final cease and desist orders,                                                               
she  reported.    This  can  be challenging  since  the  bulk  of                                                               
licensees operating unlawfully in  the state are often physically                                                               
located outside Alaska.  The  division also partners with federal                                                               
regulatory  agencies   and  law   enforcement  to   expand  tight                                                               
resources  and   it  shares  examinations,   investigations,  and                                                               
enforcement  actions,  including globally-negotiated  settlements                                                               
or  administrative  actions  to  save  time  and  money  for  all                                                               
involved.                                                                                                                       
                                                                                                                                
3:56:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON asked when  the license and registration                                                               
fees were last increased.                                                                                                       
                                                                                                                                
MS.  ANSELM answered  that the  Division  Banking and  Security's                                                               
fees are covered  in various parts of the statutes.   She offered                                                               
to provide information to the committee.                                                                                        
                                                                                                                                
3:57:22 PM                                                                                                                    
                                                                                                                                
SARA CHAMBERS, Acting  Director, Professional Licensing, Division                                                               
of  Corporations, Business,  and Professional  Licensing (DCBPL),                                                               
Juneau  Office, Department  of  Commerce,  Community, &  Economic                                                               
Development  (DCCED),  reviewed  the  division's  five  sections,                                                               
beginning with  the business  licensing section,  which currently                                                               
serves  68,503  active licensees  and  has  issued 1,426  tobacco                                                               
endorsements.   The  Corporations unit  manages 59,000  corporate                                                               
entities,   and   oversees   business   name   reservations   and                                                               
trademarks.   The professional licensing section  oversees 67,000                                                               
professional   licensees   through   the   process   of   initial                                                               
application and license  renewal for 44 programs:  21 with boards                                                               
or commissions  and 23 programs  solely managed by  the division.                                                               
The investigation section responds  to public complaints, gathers                                                               
evidence, and works with the boards  and the Department of Law on                                                               
enforcement of  professional and business licensing  statutes and                                                               
regulations.     Lastly,  the  division   employs  administrative                                                               
support unit to provide customer  service and clerical support to                                                               
the division.                                                                                                                   
                                                                                                                                
3:59:02 PM                                                                                                                    
                                                                                                                                
MS. CHAMBERS reviewed  efficiency and accountability improvements                                                               
the division  has made [slide  20].  In  May 2012, 40  percent of                                                               
Alaska's corporate  entities were  not in  good standing,  but by                                                               
implementing  a  new  data management  system  and  reaching  out                                                               
proactively,  the division  has increased  the rate  of those  in                                                               
good standing from 60 percent in 2012 to 93 percent in 2014.                                                                    
                                                                                                                                
3:59:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COLVER asked  the reason  that corporations  were                                                               
not in good standing.                                                                                                           
                                                                                                                                
MS.  CHAMBERS  answered  that  corporations  must  file  biennial                                                               
reports and keep  information up to date, such  as bylaws changes                                                               
and articles  of incorporation.   These  corporations are  not in                                                               
good standing if they fail to file timely, she said.                                                                            
                                                                                                                                
4:00:20 PM                                                                                                                    
                                                                                                                                
MS.   CHAMBERS  stated   that  business   licenses  and   several                                                               
professional  licenses can  be renewed  online.   She anticipated                                                               
that with  upgrades to the  division's database this  spring, the                                                               
Division  of Corporations,  Business, and  Professional Licensing                                                               
hopes  to greatly  expand its  online offerings  in time  for the                                                               
heaviest renewal  period.  The  division also posts a  variety of                                                               
quarterly  and  statistical  reports  online,  and  has  barcoded                                                               
professional  licensing renewal  documents  to reduce  receipting                                                               
timelines  from  three  weeks  to  three  days.    In  2014,  the                                                               
investigative section implemented  efficiencies that have reduced                                                               
the investigation timeframes by 53 percent.                                                                                     
                                                                                                                                
4:01:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HUGHES, with  respect  to professional  licensing                                                               
renewal,  commended  the  division's   willingness  to  assist  a                                                               
physician in  her district renew  a license, noting  the division                                                               
resolved  the professional  license issue  within several  hours.                                                               
In   her  previous   personal  experience,   as  a   health  care                                                               
professional, she  understood that  significant delays  can occur                                                               
with licensing.   Thus, she  was very impressed with  the service                                                               
the department provided, she said.                                                                                              
                                                                                                                                
CHAIR  OLSON commented  that Ms.  Chambers has  spent significant                                                               
time  working  with  the   legislative  committees  on  licensing                                                               
issues, in  particular, he  acknowledged the  time she  has spent                                                               
during  the  legislative  interim working  with  the  Legislative                                                               
Budget & Audit (LB&A) committee.                                                                                                
                                                                                                                                
MS. CHAMBERS reported that the  division has reduced its indirect                                                               
expenses to  the boards it  serves by  20 percent or  $1 million.                                                               
In  addition, the  division  has reduced  the  Department of  Law                                                               
(DOL) expenses by  34 percent in the past three  years.  In these                                                               
ways  the  division  has  managed   to  create  efficiencies  and                                                               
accomplish goals while  serving a growing base  of licensees, she                                                               
said.                                                                                                                           
                                                                                                                                
4:03:22 PM                                                                                                                    
                                                                                                                                
MS. CHAMBERS highlighted some of  the division's challenges.  The                                                               
division  must balance  its public  protection  mandate with  the                                                               
statutory fee-setting guidelines  without significantly hindering                                                               
Alaska's  private  businesses,  she   said.    This  summer,  the                                                               
Legislative Budget &  Audit Committee met seven  times to discuss                                                               
issues related  to the professional licensing  methodology, board                                                               
travel, the  investigative process,  and other areas  of interest                                                               
to legislators  and stakeholders in  Alaska.  The  LB&A committee                                                               
reviewed  steps taken  to  address  historical program  deficits,                                                               
including   an   appropriation   of  $3.4   million   to   offset                                                               
professional  licensees'  overpayment  of indirect  fees  over  a                                                               
period  of many  years.    The legislature  sought  to "right  an                                                               
accounting  wrong" and  that task  had been  accomplished in  the                                                               
division,  she  said.    Although  the  actions  did  not  reduce                                                               
indirect  costs to  zero, the  process to  assess indirect  costs                                                               
assures  that the  appropriate costs  are being  assessed to  the                                                               
boards.                                                                                                                         
                                                                                                                                
4:05:00 PM                                                                                                                    
                                                                                                                                
MS. CHAMBERS  identified another challenge, noting  board members                                                               
have  been quite  vocal about  the necessity  of staying  current                                                               
with  national  trends and  issues  facing  their professions  by                                                               
traveling  to  professional  conferences.   The  legislature  has                                                               
responded  and  assisted  boards  in reaching  this  goal.    She                                                               
outlined  one   statutory  paradox   that  exists  in   terms  of                                                               
enforcement.    The  division  must   respond  to  complaints  of                                                               
licensing  violations,  which  is  essential  to  the  division's                                                               
public  protection  mandate, but  in  doing  so this  creates  an                                                               
inherent conflict  with the  fee-setting requirements  of statute                                                               
since licensees must cover 100  percent of their costs, including                                                               
costs for  investigations of those  licensed and  individuals not                                                               
licensed, she said.                                                                                                             
                                                                                                                                
4:06:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX asked whether a  violator or "bad apple" is                                                               
fined to offset the overall fees and costs of the division.                                                                     
                                                                                                                                
MS.  CHAMBERS  replied  that  levied   fines  are  collected  and                                                               
deposited to  the general  fund and  do not  go to  the division.                                                               
The  division and  the  LB&A have  been  reviewing that  process;                                                               
however the division and the  boards want to avoid the appearance                                                               
of enriching the boards through  the enforcement and fine-setting                                                               
process.   She  characterized this  issue as  creating a  balance                                                               
between providing  adequate enforcement  and licensees  not being                                                               
able to  cover investigative costs.   It  is a work  in progress,                                                               
she said.                                                                                                                       
                                                                                                                                
MS.  CHAMBERS elaborated  on the  division's  process in  setting                                                               
license fees.   Investigation costs incurred  create fluctuations                                                               
that can  spike fees, in  particular, for small  licensing boards                                                               
and programs.  For example,  the midwifery program consists of 40                                                               
licensees and the  costs of one investigation assessed  on such a                                                               
small group of licensees can  adversely affect fees.  She pointed                                                               
out  that  the midwifery  profession  currently  pays $1,700  for                                                               
their biennial license fees.                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX remarked that a problem exists.                                                                           
                                                                                                                                
CHAIR  OLSON agreed;  reiterating that  the Legislative  Budget &                                                               
Audit  Committee  (LB&A)  held  seven  meetings  this  summer  to                                                               
address the complexity of these issues.                                                                                         
                                                                                                                                
4:09:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  said it  seems unfair  that a  small group                                                               
has to pay for an investigation with exorbitant license fees.                                                                   
                                                                                                                                
CHAIR  OLSON agreed,  noting that  some  investigations can  cost                                                               
over  $100,000.    He  acknowledged that  there  isn't  any  easy                                                               
remedy.                                                                                                                         
                                                                                                                                
4:10:32 PM                                                                                                                    
                                                                                                                                
MS. CHAMBERS pointed  out that since the license  renewals are on                                                               
a biennial  cycle, the  majority of revenue  is collected  in one                                                               
year, so a "false" deficit appears  in the non-renewal year.  The                                                               
division has heeded the recommendations  by the Department of Law                                                               
and the  Legislative Audit Division  to amortize  these deficits.                                                               
The division  remains committed to  work with the  legislature to                                                               
resolve this issue, she said.                                                                                                   
                                                                                                                                
4:11:30 PM                                                                                                                    
                                                                                                                                
LORI WING-HEIER,  Director, Division of Insurance,  Department of                                                               
Commerce, Community  & Economic  Development (DCCED),  stated the                                                               
Division  of  Insurance's  (DOI)   mission  is  to  regulate  the                                                               
insurance industry and protect Alaska's  consumers.  The division                                                               
accomplishes this  in two  ways:   through market  regulation and                                                               
market conduct.   In order for  an insurer to operate  in Alaska,                                                               
the company  must apply to the  state to obtain a  certificate of                                                               
authority.  The division essentially  reviews their track record,                                                               
including   their    corporate   structure,    financials,   last                                                               
examination in  another state, state of  domicile, business plan,                                                               
and  the   services  the  business  plans   to  offer  consumers.                                                               
Currently,  1,128  admitted insurers  operate  in  Alaska.   This                                                               
year, the Division of Insurance  also admitted 14 new insurers of                                                               
which seven  are domestic  insurers listing  their home  state as                                                               
Alaska.                                                                                                                         
                                                                                                                                
4:12:56 PM                                                                                                                    
                                                                                                                                
MS. WING-HEIER listed them as  Alaska National Insurance, Umialik                                                               
Insurance Company,  ARECA Insurance Management, Inc.  - the rural                                                               
electric cooperative  insurer, Alaska Timber  Insurance Exchange,                                                               
Alaska  Vision  Services,  and  the Tongass  Timber  Trust.    In                                                               
addition, the  Division of Insurance monitors  other insurers who                                                               
provide services in the state.   The division continually reviews                                                               
the  financial  solvency  and  the   best  practices  to  protect                                                               
consumers, she said.                                                                                                            
                                                                                                                                
4:13:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX asked  for an  explanation of  efforts the                                                               
division takes  on monitoring and  whether statewide  or national                                                               
sites also review all insurance companies.                                                                                      
                                                                                                                                
MS. WING-HEIER replied  that the division does all  of the above.                                                               
The  Division   of  Insurance  is   a  member  of   the  National                                                               
Association  of  Insurance   Commissioners  (NAIC)  and  conducts                                                               
multi-state exams with other commissioners  as well as conducting                                                               
individual examinations, she said.                                                                                              
                                                                                                                                
4:14:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX asked  whether the  Division of  Insurance                                                               
audits  all insurance  companies that  might provide  services in                                                               
Alaska.                                                                                                                         
                                                                                                                                
MS.  WING-HEIER answered  yes; elaborating  that the  Division of                                                               
Insurance  conducts   physical  audits  on  domestic   firms  and                                                               
participates in  multi-state "colleges"  or exams  in conjunction                                                               
with other  states.   In response  to Representative  LeDoux, she                                                               
said  the state  audits  in-state insurance  companies, but  also                                                               
partners  with out-of-state  organization on  other examinations;                                                               
however, in some  cases the division will audit  a parent company                                                               
of a  business offering services  in Alaska or in  instances when                                                               
the  division  has  reason  to  believe  an  audit  needs  to  be                                                               
performed.                                                                                                                      
                                                                                                                                
4:15:44 PM                                                                                                                    
                                                                                                                                
MS. WING-HEIER  advised members that  Alaska is a  prior approval                                                               
state for  health, life, property, casualty,  or title insurance,                                                               
which means  companies must file  with the  state for the  rate -                                                               
the price  charged - or  the form -  the terms and  conditions of                                                               
the  policy.   In 2014,  approximately 3,700  filings were  made,                                                               
with the  division disapproving  147 applicants  on the  basis of                                                               
unfair  practices  to  consumers.    She  briefly  explained  the                                                               
process,    such   that    insurance    filings   are    received                                                               
electronically,  ensuring the  companies  meet  the statutes  and                                                               
regulations, which provides an important consumer protection.                                                                   
                                                                                                                                
4:16:26 PM                                                                                                                    
                                                                                                                                
MS.   WING-HEIER   turned   to  market   conduct,   noting   that                                                               
approximately   47,000  licensed   insurance  professionals   are                                                               
licensed   in  Alaska,   including   resident  and   non-resident                                                               
adjusters, producers, bail bonds, and  title insurers.  In FY 14,                                                               
245 complaints were  received and $216,000 in  fees were returned                                                               
to consumers  as a  result of division's  actions.   She reported                                                               
that the  four investigators opened 79  investigations and closed                                                               
115  prior year  investigations.   The  division  held its  first                                                               
joint investigation with the Division  of Banking and Securities,                                                               
which  resulted  in  revocation  of  the  financial  advisor  and                                                               
insurance producer  licenses.  She  characterized 2014 as  a year                                                               
of  change,   with  the  division  implementing   new  processes,                                                               
improvements,  and   efficiencies  [slide   22].     Without  any                                                               
additional  cost to  the state,  the  division was  able to  make                                                               
property  and casualty  filings available  to the  public on  the                                                               
division's website  so that the  public does  not need to  file a                                                               
formal request for information.                                                                                                 
                                                                                                                                
4:19:10 PM                                                                                                                    
                                                                                                                                
MS. WING-HEIER  reported the Division of  Insurance has increased                                                               
its  training  efforts,  noting   six  administrative  staff  are                                                               
currently  enrolled  in  the NAIC  property  and  casualty  mini-                                                               
course.   This free online  course provides a basic  knowledge of                                                               
insurance, including learning basic  terms such as deductible and                                                               
coinsurance, which  should help  provide opportunities  for staff                                                               
mobility.   The division has  issued regulatory orders  that will                                                               
also  assist  businesses in  doing  business  with the  division.                                                               
Previously,  companies  who needed  to  file  insurance forms  by                                                               
providing the same  endorsement for 15 different  policies had to                                                               
submit the  forms 15  times.  Under  changes to  its regulations,                                                               
forms will only  need to be filed once, which  helps reduce staff                                                               
time  for  businesses  and  the  division staff,  as  well.    In                                                               
addition, the  regulation project  comment period ends  this week                                                               
on  regulations that  will allow  businesses to  conduct business                                                               
electronically.  "This  is a first for the  division; however, we                                                               
have made  the order  such that  if someone  decides they  do not                                                               
wish  to  receive  their  insurance  policy  electronically,  the                                                               
insurance company or their agent or  broker must still mail it to                                                               
them," she  said.   The division  has found  the majority  of the                                                               
people  now  wish  to  receive their  billings  and  claims  data                                                               
electronically.                                                                                                                 
                                                                                                                                
MS. WING-HEIER highlighted a number  of consumer outreach efforts                                                               
conducted by  the Division of  Insurance.  She reported  that the                                                               
division's website  contains a number  of "buttons"  that contain                                                               
useful  information  on  programs.   For  example,  the  division                                                               
produced a  "white paper" to  highlight the difference  between a                                                               
percentage  deductible versus  a flat  deductible for  insurance.                                                               
The  website also  reminds people  to consider  adding earthquake                                                               
insurance  to their  policy in  Alaska.   The  division has  been                                                               
proactive  to expand  its relationship  with  industry, with  the                                                               
emphasis on consumer protection.                                                                                                
                                                                                                                                
4:22:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX asked  whether  the  consumer outreach  is                                                               
located  on  the division's  website  or  if the  information  is                                                               
mailed.                                                                                                                         
                                                                                                                                
MS.  WING-HEIER   answered  that   the  information  is   on  the                                                               
division's website; however, as  pamphlets are published they are                                                               
sent  to independent  insurance agents  who can  deliver them  to                                                               
their  members.   Thus, the  public can  walk into  their agent's                                                               
office and  their agent can print  the PDF version of  the policy                                                               
for them.                                                                                                                       
                                                                                                                                
4:22:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX asked  for an example of  what an insurance                                                               
tip would consist of if a person was getting married.                                                                           
                                                                                                                                
MS. WING-HEIER  answered that  it might be  a reminder  to review                                                               
his/her insurance policy.                                                                                                       
                                                                                                                                
4:23:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HUGHES  asked for clarification on  the division's                                                               
role in  terms of the  implementation of the  [Patient Protection                                                               
and]  Affordable Care  Act [also  known as  the "Affordable  Care                                                               
Act"].                                                                                                                          
                                                                                                                                
MS. WING-HEIER answered that the  division has been very involved                                                               
in  the Affordable  Care Act  process during  September-November.                                                               
Although the division  does not have any  regulatory authority at                                                               
this time  on the Affordable Care  Act, the division has  been in                                                               
contact with the United Way and with primary care.                                                                              
                                                                                                                                
CHAIR OLSON answered that this authority is forthcoming.                                                                        
                                                                                                                                
4:23:54 PM                                                                                                                    
                                                                                                                                
MS.  WING-HEIER  explained that  the  Division  of Insurance  has                                                               
received numerous calls  with concerns on rates.   The department                                                               
has continued to  monitor the federal lawsuit  for the Affordable                                                               
Care Act,  and in the event  that the exchange is  not allowed to                                                               
assess any  impact this will  have on  Alaska.  In  addition, the                                                               
division  is   working  with  other  departments,   such  as  the                                                               
Department  of  Health  and  Social Services  on  options.    For                                                               
example,   she  anticipated   that  the   innovation  waiver   is                                                               
forthcoming, so  the administration has been  holding discussions                                                               
and,  in  particular,  has  been   very  cognizant  of  costs  to                                                               
individuals.                                                                                                                    
                                                                                                                                
4:25:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HUGHES offered  to meet with the  director on this                                                               
to  better understand  the process  since  the division  approves                                                               
rate increases.                                                                                                                 
                                                                                                                                
MS. WING-HEIER agreed to do so.                                                                                                 
                                                                                                                                
4:25:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON  commented that there is  some evidence,                                                               
that other states,  although not Alaska, have seen  a decrease in                                                               
escalation of premiums since the Affordable Care Act.                                                                           
                                                                                                                                
MS. WING-HEIER agreed some states have enjoyed lower rates.                                                                     
                                                                                                                                
4:26:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOSEPHSON,  setting aside the  Medicaid expansion,                                                               
recalled  that Governor  Walker  expressed an  interest in  doing                                                               
everything he could to increase the number of people insured.                                                                   
                                                                                                                                
MS. WING-HEIER answered that she believed that is correct.                                                                      
                                                                                                                                
REPRESENTATIVE   JOSEPHSON  asked   if  she   had  any   specific                                                               
information on what the governor meant by that comment.                                                                         
                                                                                                                                
MS.  WING-HEIER answered  no; but  she understood  the governor's                                                               
overall goal  is to  make insurance  available and  affordable to                                                               
Alaskans.                                                                                                                       
                                                                                                                                
CHAIR OLSON  interjected that  a portion  of it  was the  plan to                                                               
expand Medicaid in Alaska.                                                                                                      
                                                                                                                                
4:27:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KITO  related his  understanding that  the biggest                                                               
issue related to  insurance costs in Alaska is the  small pool of                                                               
those insured in  Alaska.  He asked for  further clarification on                                                               
the information that  is being placed online to  avoid Freedom of                                                               
Information Requests,  in terms  of whether staff  is determining                                                               
what  information can  be released  to ensure  confidentiality of                                                               
information.                                                                                                                    
                                                                                                                                
MS. WING-HEIER answered  that the Division of  Insurance uses the                                                               
same process it  would to provide information under  a Freedom of                                                               
Information Act  request.  She stated  that protected information                                                               
is stored  in the division's  database, but is  typically limited                                                               
to the company's  trademark or rating model  and that information                                                               
will still  be kept  confidential.  However,  most other  data is                                                               
not confidential  and will  be available  for released  after the                                                               
effective date.   For example, the rates for  the Affordable Care                                                               
Act were  effective January 1, 2015  so that is the  release date                                                               
for that information, she said.                                                                                                 
                                                                                                                                
4:28:57 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  asked how much  the Division of  Insurance generated                                                               
in the last fiscal year.                                                                                                        
                                                                                                                                
MS. WING-HEIER answered approximately $64 million.                                                                              
                                                                                                                                
CHAIR  OLSON  related  his understanding  that  the  Division  of                                                               
Insurance is  the third or  fourth largest source of  revenue for                                                               
the general fund.                                                                                                               
                                                                                                                                
MS. WING-HEIER  answered yes; noting the  Division of Insurance's                                                               
budget is approximately $7 million.                                                                                             
                                                                                                                                
CHAIR OLSON  characterized the Division  of Insurance as  a "cash                                                               
cow."                                                                                                                           
                                                                                                                                
MS. WING-HEIER agreed.                                                                                                          
                                                                                                                                
4:29:40 PM                                                                                                                    
                                                                                                                                
ACTING  COMMISSIONER  PARADY,  in   response  to  a  question  by                                                               
Representative  Colver  on  the Alaska  Tourism  Marketing  Board                                                               
(ATMB), stated  that the ATMB  is an  advisory board.   The funds                                                               
expended  are  administered  through  the  Division  of  Economic                                                               
Development (DED)  through the procurement process,  primarily in                                                               
marketing contracts for tourism.   He reiterated that the ATMB is                                                               
advisory,  but  the actual  administration  of  the funds  occurs                                                               
through the DED.                                                                                                                
                                                                                                                                
CHAIR OLSON offered  his belief that a good portion  of the funds                                                               
are for advertising.                                                                                                            
                                                                                                                                
ACTING COMMISSIONER PARADY agreed.                                                                                              
                                                                                                                                
4:30:40 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Labor and  Commerce Standing Committee  meeting was  adjourned at                                                               
4:30 p.m.                                                                                                                       

Document Name Date/Time Subjects
DCCED Overview HLC 1-26-15.pdf HL&C 1/26/2015 3:15:00 PM
DCCED Overview