Legislature(1997 - 1998)
03/11/1997 08:04 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE March 11, 1997 8:04 a.m. MEMBERS PRESENT Representative Jeannette James, Chair Representative Ethan Berkowitz Representative Fred Dyson Representative Kim Elton Representative Mark Hodgins Representative Ivan Ivan Representative Al Vezey MEMBERS ABSENT All members present. COMMITTEE CALENDAR *HOUSE BILL NO. 83 "An Act relating to commercial motor vehicle inspections; and providing for an effective date." - HEARD AND HELD *HOUSE BILL NO. 124 "An Act relating to items not subject to collective bargaining and to application of the Public Employment Relations Act to municipalities and other political subdivisions." - MOVED HB 124 OUT OF COMMITTEE *HOUSE JOINT RESOLUTION NO. 25 Proposing amendments to the Constitution of the State of Alaska to guarantee the permanent fund dividend, to provide for inflation-proofing, and to require a vote of the people before spending undistributed income from the earnings reserve of the permanent fund; and relating to the permanent fund. - HEARD AND HELD *HOUSE BILL NO. 84 "An Act limiting the authority to conduct pull-tab charitable gaming to qualified organizations that are exempt from taxation under 26 U.S.C. 501(c)(3) or (19); and providing for an effective date." - SCHEDULED BUT NOT HEARD *HOUSE BILL NO. 78 "An Act relating to the definition of certain state receipts; and providing for an effective date." - SCHEDULED BUT NOT HEARD *HOUSE BILL NO. 153 "An Act relating to the eligibility of aliens for state public assistance and medical assistance programs affected by federal welfare reform legislation; and providing for an effective date." - SCHEDULED BUT NOT HEARD *HOUSE BILL NO. 155 "An Act relating to hearings before and authorizing fees for the State Commission for Human Rights; and providing for an effective date." - SCHEDULED BUT NOT HEARD (* First public hearing) PREVIOUS ACTION BILL: HB 83 SHORT TITLE: COMMERCIAL VEHICLE INSPECTIONS SPONSOR(S): REPRESENTATIVE(S) MARTIN JRN-DATE JRN-PG ACTION 01/22/97 122 (H) READ THE FIRST TIME - REFERRAL(S) 01/22/97 122 (H) TRANSPORTATION, STATE AFFAIRS 02/03/97 (H) TRA AT 1:00 PM CAPITOL 17 02/03/97 (H) MINUTE(TRA) 02/10/97 (H) MINUTE(TRA) 02/12/97 306 (H) TRA RPT CS(TRA) NT 3DP 2NR 02/12/97 307 (H) DP: SANDERS, KOOKESH, MASEK 02/12/97 307 (H) NR: ELTON, COWDERY 02/12/97 307 (H) ZERO FISCAL NOTE (DPS) 02/12/97 307 (H) REFERRED TO STATE AFFAIRS 03/11/97 (H) STA AT 8:00 AM CAPITOL 102 BILL: HB 124 SHORT TITLE: PERA: LOCAL EXEMPTION/NONNEGOTIABLE ITEMS SPONSOR(S): REPRESENTATIVE(S) VEZEY JRN-DATE JRN-PG ACTION 02/12/97 314 (H) READ THE FIRST TIME - REFERRAL(S) 02/12/97 314 (H) STATE AFFAIRS, JUDICIARY 03/11/97 (H) STA AT 8:00 AM CAPITOL 102 BILL: HJR 25 SHORT TITLE: CONST. AM: PERM. FUND INCOME & DIVIDEND SPONSOR(S): REPRESENTATIVE(S) AUSTERMAN JRN-DATE JRN-PG ACTION 02/26/97 483 (H) READ THE FIRST TIME - REFERRAL(S) 02/26/97 483 (H) STATE AFFAIRS, JUDICIARY, FINANCE 03/11/97 (H) STA AT 8:00 AM CAPITOL 102 WITNESS REGISTER REPRESENTATIVE TERRY MARTIN Alaska State Legislature State Capitol, Room 502 Juneau, Alaska 99801-1182 Telephone: (907) 465-3783 POSITION STATEMENT: Sponsor of HB 83. FRANK DILLON, Executive Director Alaska Trucking Association 3443 Minnesota Drive Anchorage, Alaska 99503 Telephone: (907) 276-1149 POSITION STATEMENT: Provided testimony on HB 83. JOHN MANLY, Legislative Assistant to Representative Terry Martin State Capitol, Room 502 Juneau, Alaska 99801-1182 Telephone: (907) 465-3783 POSITION STATEMENT: Provided testimony on HB 83. SERGEANT BRAD BROWN Division of Alaska State Troopers Department of Public Safety 5700 East Tudor Road Anchorage, Alaska 99507-1225 Telephone: (907) 269-5086 POSITION STATEMENT: Provided testimony on HB 83. ED FLANAGAN, Deputy Commissioner Office of the Commissioner Department of Labor P.O. Box 21149 Juneau, Alaska 99802-1149 Telephone: (907) 465-2700 POSITION STATEMENT: Provided testimony in opposition to HB 124. JOHN CYR, President National Education Association (NEA) - Alaska 114 Second Street Juneau, Alaska 99801 Telephone: (907) 586-3090 POSITION STATEMENT: Provided testimony in opposition to HB 124. REPRESENTATIVE ALAN AUSTERMAN Alaska State Legislature State Capitol, Room 434 Juneau, Alaska 99801-1182 Telephone: (907) 465-2487 POSITION STATEMENT: Sponsor of HJR 25. JIM KELLY, Research and Liaison Officer Alaska Permanent Fund Corporation Department of Revenue P.O. Box 25500 Juneau, Alaska 99802-5500 Telephone: (907) 465-2059 POSITION STATEMENT: Provided testimony on HJR 25. ACTION NARRATIVE TAPE 97-24, SIDE A Number 0001 The House State Affairs Standing Committee was called to order by Chair Jeannette James at 8:04 a.m. Members present at the call to order were Representatives James, Dyson, Elton, Ivan and Vezey. Members absent were Berkowitz and Hodgins. HB 83 - COMMERCIAL VEHICLE INSPECTIONS The first order of business to come before the House State Affairs Standing Committee was HB 83, "An Act relating to commercial motor vehicle inspections; and providing for an effective date." CHAIR JEANNETTE JAMES called on Representative Terry Martin, sponsor of HB 83, to present the bill. Number 0044 REPRESENTATIVE TERRY MARTIN, Alaska State Legislature, stated HB 83 was an easy bill. It was one that he decided to introduce because it came through a legitimate organization - the Office of the Ombudsman. The ombudsman recommended that the commercial vehicle inspection law be repealed for two major reasons: It appeared that there was a law that was excessive as far as protecting the public's interest; and that the Alaska Trucking Association exceeded a double inspection every year. In addition, if there was a useless law on the book, the legislature could be stung by it. He was pleased with the support of the bill by the industry and the State Troopers in the hearings in the House Transportation Standing Committee. Number 0166 CHAIR JAMES thanked Representative Martin for bringing forward this issue. She was aware of the inspection process that was put on the books and never funded. "It's a good idea. It's not working and hasn't been working; and, so let's move on and do something that works better." Number 0185 REPRESENTATIVE FRED DYSON asked Representative Martin if there was anybody against this thing? REPRESENTATIVE MARTIN replied that he had not heard anyone, yet. Number 0219 REPRESENTATIVE ETHAN BERKOWITZ stated he recalled working on a case where somebody had a recreational commercial vehicle and whether or not it fell within the reach of these sorts of statutes. He asked Representative Martin if he thought these types of vehicles should fall within the reach of these statutes? Number 0253 REPRESENTATIVE MARTIN replied he did not want to pose as a lawyer or as an expert. There were specialist here to handle that question both from the trucking industry and the Department of Public Safety. Number 0279 REPRESENTATIVE AL VEZEY commented that "commercial motor vehicle" was defined in Sec. 6. He asked Representative Martin who was going to do these vehicle inspections? Number 0319 REPRESENTATIVE MARTIN replied the in-house trucking industry was doing a superb job right now, and Mr. Frank Dillon, Alaska Trucking Association, was here today to talk about that. The industry was worried about their own safety and liability. There was a good daily procedure where the truck driver must list anything that was found that could be a problem. At the end of the driver's duty, the list went to the mechanic to be fixed and checked off for the next day. "I think that's far superior than what the law has done because these people are interested, they do not want to get out there with vehicles that are going to fall apart." Number 0389 REPRESENTATIVE VEZEY asked Representative Martin who was going to do the inspections? What was the intent that qualified them under the law? Number 0407 REPRESENTATIVE MARTIN deferred the question to the industry. REPRESENTATIVE MARTIN further stated that the State Troopers could show what they were doing and what the industry was doing in compliance with the federal law, plus their own in-house inspection guidelines. Number 0442 REPRESENTATIVE IVAN IVAN referred the committee members to Sec. 2 and said, he was curious which law or statute this bill covered and what were the qualifications. Number 0485 FRANK DILLON, Executive Director, Alaska Trucking Association, explained, in response to Representative Vezey's question, the association had adopted the federal regulations through the administrative process - Section 396.25, "Qualification of inspectors." The section defined by training and experience those who would be qualified to do a federal motor safety inspection. He cited most qualified motor mechanics, mechanics who work on trucks, owner-operators, or any vendor who does truck repair work would be capable of doing such inspections. Number 0570 REPRESENTATIVE VEZEY explained he had done a lot of work in the area of privatization of the Division of Motor Vehicles (DMV). The model was obtained from the Federal Aviation Administration (FAA) where there was an unprecedented amount of inspection and safety programs. "There are no government employees really that do any of this. When we say and qualify under law why don't we say, `qualified under federal regulations.'" It was done in other cases. The state law moved with the changes in the federal law. "You have to comply with federal law and you have to comply with state law." So, why not bring the two together so that there was not any conflict? Number 0633 MR. DILLON replied he was told that this bill was drafted specifically to do that and that was why the term "under federal law" was used. REPRESENTATIVE VEZEY replied the bill said, "under law." MR. DILLON further stated the intent of the bill was to make it inclusive so that the federal rules would apply. REPRESENTATIVE VEZEY said the only law that would apply would be the state regulations adopted, according to his understanding. The bill did not refer to federal regulations. That was done in other statutes. He cited Title 17, "controlled substances." "We simply adopt - automatically - we defer to federal regulation." He suggested saying "in according with federal regulations." Number 0696 CHAIR JAMES asked Representative Vezey if he had looked at Sec. 4 - "Regulations."? REPRESENTATIVE VEZEY replied he was not talking about regulations, he was talking about the qualifications for inspectors in Sec. 2. The qualifications, which were also a regulation, could change. "I understand that we're talking about the regulations -- instructs us to adopt federal regulations. I'm curious why we just can't use them and not worry about updating our own administrative code." Number 0741 CHAIR JAMES replied she understood exactly what Representative Vezey was saying now. She cited Sec. 2, "Commercial vehicle inspectors," and read, "A person may not conduct commercial vehicle inspections unless qualified under law." Therefore, the only law that would be administrative law as opposed to statutory law. Was that your concern, Representative Vezey? Number 0771 REPRESENTATIVE VEZEY replied, "Correct." The law that would be applicable would either be a statute or a regulation that came down the line. CHAIR JAMES replied she understood. According to her attitude towards regulations, she preferred statutory law as opposed to regulatory law. Therefore, the language needed to be changed. She asked if the drafter of the bill was here today? Number 0794 JOHN MANLY, Legislative Assistant to Representative Terry Martin, explained the drafter was Mike Ford. The reason he drafted it that way was so that it applied to either the state or the federal law. Number 0820 MR. DILLON explained there was a bill passed in the mid-1980's, at the time of the demise of the Alaska Transportation Commission that handled the safety regulations and enforcement of the state. When the commission sunsetted it passed a law that would set up a system with two inspections a year through a vendor or a qualified inspection station. That never happened, however. In 1990, when he came to work in Alaska in the trucking industry, there was a glaring hole in the structure. There was no safety enforcement or inspection program. As a result, the trucking industry got together with the State Troops to find avenues to access federal money and to set up a program through the troopers. The trucking industry was successful in adopting, administratively, the Federal Motors Carrier Safety Regulations. They had been in effect since 1993 and the industry had operated under their prescription since that time. The drivers and the companies had no better concern for their safety compared to other industries. The drivers were concerned for their own personal safety, and the companies were concerned for their expenses. In other words, the self-inspection idea was not designed to let a company get by with running equipment that was not safe; that was not the purpose. What we had was a law that said we would have two inspections and that we would set up a system of vendors to do the inspections across the state. We felt that this would be redundant and would probably lessen the impact of the regulations that were in place ending up with less safe trucks than on the road now. The goal in this effort was to make this as strong as possible. We would prefer to have it in statute; that was our intent. We sought the administrative adoption mode out of desperation at the time. We would be happy to have these regulations in statute in total and a way to adopt the changes as they came up with the federal government. The regulations had been drafted very carefully to address specific problems in the area of safety. They covered everything from driver qualification to equipment safety. The industry had accepted the regulations both on the intra and inter-state basis. They provided a good framework for folks to operate safe companies. The oversight to this entire process was the State Troopers and the Commercial Vehicle Unit. The unit, right now, in cooperation and guidance with the feds audited companies. It audited both equipment on the road and the companies. The only problem with the system right now was that there was not enough inspectors to do an adequate job. He reiterated the intent was to simply put into effect, statutorily, what was in effect in reality. Number 1062 REPRESENTATIVE BERKOWITZ reiterated he had worked on a case where individuals were "recreationally" using commercial vehicles. He wondered if that would fall out of the scope defined in Sec. 6. Number 1099 MR. DILLON replied, as defined in the adopted regulations, "commercial vehicle" was defined as one which was used for the furtherance of a commercial enterprise. In other words, if one used it to make money or to further a business enterprise, it was a commercial vehicle, regardless of what it was called. Number 1160 REPRESENTATIVE BERKOWITZ replied, so, there was a definition for commercial purposes that would make this universal. MR. DILLON replied, "That's correct." It was effective through regulation now. Number 1172 REPRESENTATIVE BERKOWITZ asked Mr. Dillon if there was anything that precluded the trucking industry from doing its own inspections? He imagined it would be useful for insurance purposes. Number 1183 MR. DILLON replied the basic inspection was done by the company itself on both a daily basis and an annual basis. The option, right now, was that if a company did not have a qualified mechanic in its fleet, it could be taken to a vendor for the inspection. Most of the trucking companies had mechanics that worked full-time for them who were qualified and who were expected to keep the equipment safe and operable. "We don't see any problem with those folks doing the self-inspections and making sure that equipment is safe." Furthermore, one or two inspections a year did not make a safe truck. "If that's all you're doing and you're doing that just to meet the intent of the regulation, you're not doing what should be done as a responsible operator." That was why the industry advocated and enforced the daily inspection report forms, even for a person who owned his own truck. If there was a problem and it was not repaired then the onus of that violation was on the driver for taking it out and on the company for having sent it out. The intent behind all of the regulations was that they applied to both the driver and the company. The record reflected the arrival of Representative Mark Hodgins at 8:22 a.m. Number 1286 REPRESENTATIVE VEZEY asked Mr. Dillon if he had any ideas, in regards to his comments earlier, that there were not enough inspectors? Number 1294 MR. DILLON replied, currently, there were two troopers who worked in the Commercial Vehicle Unit. They had four inspectors working with them who were not commissioned by the Department of Public Safety, but who functioned as truck inspectors. The six of them were undermanned. They could not do the geographical work and the number of inspection that were necessary. The association was hoping that it could find ways to work with the legislature to increase the number of inspectors by two or three. It was also hoping that with the approval of Executive Order 98, the merging of the functions that covered trucking in the Department of Transportation, and the cross training of the weigh and inspection people, additional inspectors would be added without, fundamentally, having to spend any more money. Right now, however, there was not enough people to do the equipment inspections that were needed. There was not a major problem with accidents related to commercial vehicle equipment, however. The state ranked in the top four in terms of safety per mile and per ton for commercial equipment. Number 1386 REPRESENTATIVE VEZEY stated he thought that the inspectors were going to be private sector employees. Number 1393 MR. DILLON replied the inspection itself could be done by a person who met the qualifications in the regulations. There was also an oversight program with the State Troopers where they could stop equipment for cause and inspect it. There was also a national program called the Commercial Vehicle Safety Alliance (CVSA). The stickers that were seen in the windows of the trucks were inspections done by the troopers. That was an entirely different program from the daily and annual inspections, however. The enforcement part would be done by the Alaska State Troopers, and the inspection part would be done by an employee of a company or a private vendor. Number 1450 REPRESENTATIVE VEZEY said that the bill called for an annual inspection. "That's right up there with being worthless, in my opinion. I can't even think of how many things that would break in one annual period." A vehicle that was safe today was not safe tomorrow. Number 1469 MR. DILLON replied, "I couldn't agree with you more." That was why the bill was perfunctory. On the other hand, he knew of equipment that was only getting inspected once a year and when it did get inspected major repairs were necessary. Nobody, in the state, who operated a truck with a gross vehicle weight of more than 10,000 pounds, should not be inspecting it daily and completing a daily inspection report. The annual inspection, he reiterated, was a way to insure that one time during the year the equipment was defect free. The trucking industry knew that one inspection per year was not enough, which was why it worked with the troopers. Number 1517 CHAIR JAMES said the language in the law that was being deleted was put in place about ten years ago which called for the privatization of authorized inspectors rather than the troopers. There were no funds to certify the inspectors so it was never implemented. Now, it was being taken away and the current method was being put into law. She stated more intensive language was needed under the "inspectors" in the bill to incorporate the federal law. She asked Mr. Dillon, if that was done, would it call for more than an annual inspection? Number 1581 MR. DILLON replied, "Certainly." The federal regulations applied, period, to anybody who handled or operated inter-state freight. The federal government superseded the state in that regard. That was one of the compelling reasons for going into the inspection program. The federal government's mandate to have a state program through the troopers was tied into about 10 percent or 20 percent of the state's highway funding. A substantial portion of the trooper's budget was paid for by the federal government through a program called the Motor Carrier Safety Assistance Program. Therefore, we were putting into the state statute what we were required to do federally. If we could find a way to craft the language so that we automatically updated the state's law as the federal law changed, it would be ideal. He was not sure if that could be done, however. CHAIR JAMES noted for the record that Representatives Ethan Berkowitz and Mark Hodgins were present. Number 1693 REPRESENTATIVE BERKOWITZ asked Mr. Dillon if there was a back-log of the inspection requirements, and was it keeping trucks off of the road? Number 1700 MR. DILLON replied, "No." The current annual inspection was being done by companies and/or vendors now. The enforcement was being done by the troopers on a spot-check basis. Number 1723 REPRESENTATIVE MARK HODGINS noted that he had owned and operated trucks for the last 29 years. Anytime one of his trucks went out on the road they were always at risk to being inspected. Therefore, it behooved him as a business operator to make sure that they were in the best condition possible. Anytime there was a light out, for example, the operator was subject to being pulled over and detained. Generally, that would cost six to eight times more than the preventative maintenance. As Representative Vezey noted, there were times when mechanical things would happen so inspections were good. Number 1796 CHAIR JAMES stated it would be interesting to see how the operations would fit under the statutory authority. This was a good example of where the legislature had the responsibility: To make law, to ensure that the law worked, and to require as few regulations as possible so that the statute was the operating law. Number 1834 REPRESENTATIVE KIM ELTON said he was comfortable with the bill, as drafted. Mr. Dillon noted that he was comfortable with the doubling in the size of the regulations. He also commented that the state needed more state employees which ran counter-intuitive to what the legislature heard. He noted for the record that there were some people who were familiar with the way government worked and the way the industry worked, and who were willing to be counter-intuitive. Number 1869 CHAIR JAMES replied she knew Representative Elton would get an opportunity to say, "more government was better." Number 1892 SERGEANT BRAD BROWN, Division of Alaska State Troopers, Department of Public Safety, was the first person to testify via teleconference in Anchorage. He recommended in Sec. 2, that the language read "the inspectors must be qualified pursuant to AS 28.32.080." It would cover the qualifications of the inspectors instead of using the language "qualified under law." Number 1925 CHAIR JAMES appreciated his suggestion. It was a simple solution. Did the committee members understand the suggestion? Number 1931 REPRESENTATIVE VEZEY asked Sergeant Brown what inspectors was he talking about - the government employees or the private sector mechanics? Number 1938 SERGEANT BROWN replied inspectors, including himself, were trained in accordance to North American standards which exceeded that of the industry in some respects. Thus, the suggestion addressed the qualifications of the civilian inspector. Number 1958 REPRESENTATIVE VEZEY said that was not distinguished in the law. He asked Sergeant Brown, again, who were we talking about here? Number 1963 SERGEANT BROWN replied it primarily addressed that the inspectors meet the qualifications in accordance with the Motor Carrier Safety Regulations. Number 1975 REPRESENTATIVE VEZEY asked Sergeant Brown if the intent was to put requirements onto the regulatory agencies that inspected the vehicles or the paper work? Number 1986 SERGEANT BROWN replied he was not sure that he understood the question. Number 1995 REPRESENTATIVE VEZEY stated that it primarily addressed the mechanics who worked for the private sector, but the law did not distinguish between them. Therefore, he wondered if the qualifications were for the regulatory agency employees; and, was it a physical or an administrative inspection? Number 2020 SERGEANT BROWN replied we were looking at the qualifications of the civilian inspectors and not so much the qualifications of the state inspectors. The state inspectors met their qualifications in accordance with the North American standards, an international inspection criteria. The CVSA basically said that when the decal was placed on a vehicle it entitled a truck to travel through Canada, the U.S. and into Mexico, and the operator or the company would be free of having to stop and submit to further inspections so long as the sticker was current. Therefore, the intent of the law was to set out qualifications for the civilian inspectors in accordance with the Motor Carrier Safety Regulations that had been adopted. It further clarified that there would be one annual inspection compared to two annual inspections because it was not consistent with the motor carrier regulations. Number 2099 REPRESENTATIVE VEZEY commented that inter-state commerce was already preempted by federal law. The federal law also affected intra-state commerce. It appeared, therefore, that a statute was being written that only applied to intra-state commerce. Number 2126 SERGEANT BROWN stated that we were trying to ensure compatibility and that nobody was treated differently. The intent was to have everybody play by the same rules and to sing from the same sheet of music. Number 2165 CHAIR JAMES commented there were qualified commercial vehicle inspectors. Therefore, she wondered if the trooper, who also performed inspections, was an enforcement officer as opposed to an inspection officer. Number 2191 SERGEANT BROWN replied, "That's correct." CHAIR JAMES replied in-order-to enforce inspection, therefore, one had to be a qualified inspector. Number 2198 SERGEANT BROWN replied in one sense, "Yes." There were different levels of inspection, however, that could be performed by field personnel. A person would have to be qualified in accordance to the provisions listed in the Federal Motor Carrier Safety Regulations - Title 49. However, to stop a commercial vehicle and conduct an inspection did not require any special certification because any trooper or enforcement officer should be able to write up a head light discrepancy, for example. Therefore, we were looking at inspection qualifications that were in accordance to level one standards. Number 2242 REPRESENTATIVE VEZEY stated his understanding was that most vehicle inspections took place at the weigh scales, at least that was where the number one opportunity was. Now, that was proposed to be taken over by the Department of Transportation. He wondered if it would make more sense to use the Department of Transportation's personnel to do an inspection at the scales. Number 2271 SERGEANT BROWN replied the weigh station was a good place to contact the vehicles. However, the majority of the serious violations were not detected at the weigh stations because there was a considerable amount of commercial traffic that did cross the scales. The purpose of the program was to be a random road side inspection. Thus, the troopers would go to construction sites, for example, to inspect vehicles. In addition, when the troopers did work the scales, they averaged one and one-half violations per commercial vehicle. Away from the weigh station, the violations jumped to four to six depending on the area. In the last three years, the Alaska State Troopers had conducted nearly 6,000 inspections statewide, of which, 26,000 violations had been written. "Therefore, we do not detect the more serious equipment at the weigh station. It's more of a random sampling and stopping." CHAIR JAMES asked Sergeant Brown if he had anything more to add to his testimony? Number 2332 SERGEANT BROWN referred the committee members to page 2, line 7, and suggested eliminating the "(2)" in the statute referenced. It was too restrictive for the application of commercial vehicles. The troopers wanted to adopt all of AS 28.05.011. "My recommendation is that the (2) be deleted and just leave the Alaska Statute as whole." Number 2379 CHAIR JAMES asked if the committee members were willing to accept the recommendations of Sergeant Brown? Was somebody willing to make a conceptual amendment? Number 2390 REPRESENTATIVE VEZEY asked that the bill be held over until the next committee hearing. CHAIR JAMES replied we would hold the bill until Thursday, March 13, 1997 to come up with a committee substitute. HB 124 - PERA: LOCAL EXEMPTION/NONNEGOTIABLE ITEMS The next order of business to come before the House State Affairs Standing Committee was HB 124, "An Act relating to items not subject to collective bargaining and to application of the Public Employment Relations Act to municipalities and other political subdivisions." CHAIR JAMES called on Representative Al Vezey, sponsor of HB 124, to present the bill. Number 2422 REPRESENTATIVE VEZEY explained HB 124 did two things. First, it added to existing state statute a list of the items that were not subject to negotiations during the collective bargaining process under the Public Employees Relations Act (PERA). The items were subject to state privatizing or contracting out for services. Second, it allowed for the political subdivision of the state to get into PERA, but once in, it did not allow for it to get out. "I think that is an affront to the democratic process. This bill merely clarifies that through the democratic process, political subdivisions can by vote decide to be in PERA or they can decide to be out of PERA." There were hundreds of methods of employee management and relations, and PERA was only one of those. The bill mandated to a few municipalities, a distinct minority in the state, that they had to stay under PERA when other communities that were not subject to PERA had more flexibility in regards to their management of their employee relations. TAPE 97-24, SIDE B Number 0006 ED FLANAGAN, Deputy Commissioner, Office of the Commissioner Department of Labor, was the first person to testify in Juneau. The Public Employees Relations Act was in Title 23, the Department of Labor statute. It was administered for the state by the Alaska Labor Relations Agency. The department was opposed to the bill because it potentially denied the right of collective bargaining currently covered under the act. It had been portrayed as leveling the playing field. The department, however, believed that it "blew up and obliterated the playing field," because employees that were currently organized in unions would potentially loose that right. The method of choice for municipalities that opted out of PERA or that did not recognize bargaining was no labor relations management. MR. FLANAGAN further stated that the issue of local control was adequately addressed in the statute which provided for legislative approval for money. The department also believed that the subcontracting provision would have a chilling effect on meaningful negotiations of any public employer. The law worked as it stood now. And, municipalities going in and out of PERA would create mayhem and disturb a rather orderly system. Number 0140 REPRESENTATIVE DYSON asked Mr. Flanagan if the contracting out was negotiated under present law? Number 0156 MR. FLANAGAN replied it was provided for in the collective bargaining agreement. There were agreements that were silent to subcontracting. Most, however, required a feasibility study and a cost effectiveness study to show a savings before it could be done. Furthermore, there was only a requirement to bargain at the table, not a requirement to agree to any particular term or even to include that language. It was part of the whole mix of issue that were negotiated. Number 0194 REPRESENTATIVE DYSON stated that a political subdivision could find itself in the position of balancing its best delivery of service for the public and taking into account its responsibility of the present employees under the contract. From a public policy perspective, he asked Mr. Flanagan, what restrictions should be put on a political subdivision when it was trying to find the best way to deliver services to the public? Number 0226 MR. FLANAGAN replied it honored what ever commitments that it had made in the form of a contractual relationship with the employees in a collective bargaining agreement. If there was no language, then it was whatever the public or the legislative body felt was fair treatment. Number 0242 REPRESENTATIVE DYSON agreed that we needed to stick by our commitments. He asked Mr. Flanagan if a political subdivision in the state was absolutely free to contract out for the next cycle of services that were formally done by public employees under a labor agreement? Number 0264 MR. FLANAGAN replied that would depend on the outcome of the negotiations for the new contract. Number 0284 REPRESENTATIVE DYSON wondered if, at the end of a contractual period, under present state law, there was an obligation to do any negotiating. If a political subdivision decided that it wanted to eliminate doing this with public employees and wanted to contract it out, could it not just announce that decision, and not have to begin a new contract? Number 0309 MR. FLANAGAN replied not until a new contract was negotiated. In most contracts, there was a duty to bargain for a successor agreement, or a lack there of. There was a transition period that would have to be undertaken. It would depend on the existing contractual language in regards to its own expiration. Number 0328 CHAIR JAMES stated that she generally supported people forming a union to negotiate the way that they were treated in the work place. In the private sector, she also supported the ability to negotiate wages and benefits. In the public sector, however, she found union negotiations troubling; because, generally the negotiations were done with the Administration or the authorized employees and the workers, followed with the approval by the elected council and then the public, who ultimately were the employers. "This is a government where all the government is a people's government. And, we're all participants." Public employee unions was that it was set up to be conflictive and to not run smoothly. The reason for bargaining was to make things run better; or, in other words, an agreement between those who work and those who tell the people what to do. In addition, the public was on the non-union side rather than on the union side, nationally. Trade union membership had declined and most of the union members were public employees, nationally. She also believed that a deal made was a deal made, and that the rules should not change in the middle of a game. However, economics changed and many times the unions were unbending, especially in small communities. If one agreed that the public ran the system, then why should they not have the ability to say, "we don't want to do this anymore?" Number 0453 MR. FLANAGAN responded he was aware that some differentiated between public and private employees. The department believed that when it came to the basic issue of the right to organize, it did not differentiate because, "a worker is a worker is a worker." A worker should have the basic right to join collectively for a collective voice and for strength in numbers to negotiate with his or her employer. Chair James was correct, nationally, the growth had been greater in the public sector rather than the private sector in unionization. The large majority of union members were still in the private sector; however, at least two-thirds. The local electorate had its voice in the municipal or state election that elected the representatives who exercised the statutory authority under PERA to approve or to reject the monetary terms of an agreement. It also elected, in most cases, the principle executive officer charged with negotiating the agreement. The general climate or tenor of the public sector labor relations in the state was open to question as to how much discord there was out there. It was a fact throughout history that a strike, a protracted impasse, a mediation, or an arbitration decision received headline news. An agreement that was negotiated relatively quickly and quietly and passed without controversy received no ink. In addition, there were numerous examples of when public employees threw their bargaining agent a half-step forward. He cited the city of Fairbanks when the employees froze their agreement and deferred a raise for three to four years in 1986. They system worked pretty well. The Alaska Labor Relations Agency had done a lot to try to encourage mediation rather than strikes. Number 0654 CHAIR JAMES agreed that there were some that worked good and some that did not work good. She had seen both and she was familiar with the trials in the Fairbanks area. When the economy was down and wages were stuck at a certain place, that was when it got even more controversial because the people who were paying the bills for the public employees were not making nearly as much so they didn't want to pay anymore. The city of North Pole opted not to participate in PERA and they got along real well. "In fact, I think they're very, very effective and a very good operation in the city of North Pole." She felt it would be pretty binding for smaller communities, however. They could opt for PERA when a plant was in town, for example, and when the plant moved out, what did the communities do then? Number 0740 MR. FLANAGAN said there had been organizing attempts in North Pole when things probably were not going so well. "Nobody's saying all employees should be in a union. What we're saying is they should have that right, should they choose, to petition for and then get an election." And, because North Pole opted out at that time, the employees did not have that recourse. It was a difference of philosophy. It was unfortunate when a plant moved out of town, for example, but it did not give any employer the right to unilaterally say it was a problem and do away with a collective bargaining agreement. Number 0786 CHAIR JAMES asked Mr. Flanagan who should make the decision that they had a right? Was it an inherent, state statute, or public right to make that decision? Number 0805 MR. FLANAGAN replied the legislature in 1972 found that the employees should have the right to make that decision. A floor amendment allowed for the "opt-out" exemption. That was the determining factor. State law still said that employees should have the right to bargain. However, in this situation employers had the chance to opt out, of which, some have exercised that right. The department believed that employees should have the right to organize, and once it was granted it was meaningless if it could be taken away. Number 0847 REPRESENTATIVE DYSON stated that the public could, once and for all, do away with a right that they once held. The public, once they have entered into a public employee union agreement, could never go back to where they were. Number 0888 MR. FLANAGAN replied, "Yes." Number 0893 REPRESENTATIVE BERKOWITZ asked Mr. Flanagan if there was anything that would prevent a re-negotiation in the middle of a contract? Number 0910 MR. FLANAGAN replied there was nothing to prevent that. The act would be silent. Most contracts allowed for - by mutual agreement - for a revisiting or a reopening. The example he cited earlier from the city of Fairbanks was exactly that. The contract was in effect for three years with two annual raises which were deferred for a number of years extending the contract and saving the employer a great deal of money. Letter-of-agreements were common in both state and political subdivision agreements for mid-term amendments to the contract. Number 0953 REPRESENTATIVE BERKOWITZ asked Mr. Flanagan if Sec. 2 in the bill would allow political subdivisions to treat their unions differently than private organizations? Number 0964 MR. FLANAGAN replied, "Yes." A private sector employer was always covered by the National Labor Relations Act; and, therefore, subject to organizing under the act by their employees. Employers became non-union because the employees at some point decided to de- certify the union. Private sector employers did not come in and out of coverage under the National Labor Relations Act, unless there was Congressional action to amend the statute. Number 1010 CHAIR JAMES explained her political philosophy was that the people had the power while Mr. Flanagan said in this case that they did not have the power. Therefore, "If we say once you're in you can never get out you're denying future people from making that decision or changing that decision." She struggled with that because it did not fit the democratic process. It seemed that the members of a bargaining unit had more rights than those who were not a member creating an uneven playing field. Similarly, the Twentieth Alaska State Legislature could not bind future legislatures. Number 1116 MR. FLANAGAN replied the public that would potentially revoke this right enjoyed the same rights in their work situation in most private work places. Therefore, "We have the will of the majority with the protection of the minority in this country. And, if you believe that collective bargaining is a basic right of workers, I guess, where we depart is making a differentiation between public and private workers." The public had a voice or we would not be here today. "You folks may in fact exercise that and change it. We hope you don't, but we'll see how it turns out." Number 1165 REPRESENTATIVE VEZEY explained the cities of Bethel, Kotzebue and Haines were in court over the subject of their coverage under PERA. He asked Mr. Flanagan if he knew the outcome of those court cases? Number 1192 MR. FLANAGAN replied there was closure with the city of Kotzebue with the superior court decision, therefore, its option to not be covered under PERA was effective. The city of Haines and their option to not be covered under PERA was upheld by the Alaska Labor Relations Agency. There was a remand to the agency and it was found that the city had effectively exercised its option. He was not sure of the status of the city of Bethel. Number 1251 REPRESENTATIVE VEZEY explained his office had called the city of Bethel and they were still trying to find somebody that knew something about it. MR. FLANAGAN stated it sounded like they did not have an agreement, if it did not know if it was union or not. Number 1263 REPRESENTATIVE IVAN wondered if once a community decided to unionize, if it was forever. CHAIR JAMES replied that currently was the way. The bill would allow for municipalities or areas to opt out again. Number 1318 JOHN CYR, President, National Education Association (NEA) - Alaska, was the next person to testify in Juneau. The NEA-Alaska was opposed to HB 124. It found both sections onerous. The first section that allowed for subcontracting was a bad idea for educational purposes. The law did not just deal with municipalities and state workers, it also dealt with school districts. He explained for 20 years school districts were under Title 14 which did not allow school districts finality in bargaining. School employees did not have the right to binding arbitration nor did they have the right to strike. As a result, the NEA-Alaska spent 20 years talking to members of the legislature on how to resolve the problem. It was the will of the members that school districts have binding arbitration to settle labor disputes with their employees. It was obvious during the discussions that school districts were not interested in binding arbitration because they did not want to put the final decision in the hands of a third party arbitrator, who could be from out of state or not in the community. Therefore, school districts were put under PERA. The NEA-Alaska did not want that, but through the negotiation process it became obvious that it would be the only route to finality. It gave the districts access to the labor relations agency and a playing field that was understood. Last year, the process was tweaked in HB 465. It made the initial proposal for the district and the association open for public review forcing the school district to seek input on its proposals from the public. The NEA- Alaska believed that to be taken out of PERA removed the public and its oversight in school district negotiations. Right now, there were 23 contracts being negotiated around the state. "And, you know they will be settled thoroughly without a whole lot of rancor." MR. CYR further stated that the NEA-Alaska believed subcontracting was a bad idea, especially for schools, because it led to schools- for-profit. He cited the lunch program where the corporate dollar meant more than nutrition. He was concerned that health, safety and the best teaching practices would be less important than whether or not a corporation made money. In addition, subcontracting removed the parents from control. The parents, right now, were ultimately in control of school districts through the school board and through the negotiation process. "When you subcontract then the corporate entity is in control of those -- that section of your work force, not the parents, not the community, but the corporation." MR. CYR further said there were a lot of unintended consequences that ran through the bill for school districts. He explained wages, benefits, working conditions, for example, were bargained for and a part of every contract; and rightfully so. He cited the inclusion of parents and teachers to hire, teacher mentoring to ensure quality and professional growth, school committee to address gang violence and drugs, student and parental input in evaluations, student performance bench marks, exit criteria for seniors, and language for the inclusion of special education children in regular classrooms were the issue being discussed in Anchorage. And, as a result of the bill would be taken out of the public control. In addition, national research indicated that every state that was not unionized, student performance was lower; it dropped by up to 10 points. It came to the ability of districts and states to keep and retain quality people; it was as simple as that. MR. CYR further said, historically, employees had the right to bargain and to meet with their employers to talk about their work conditions. That was the very soul of what America was about. "It's who we are. It's what we do." Therefore, to deny that right to any group - public or private - was wrong. Number 1894 REPRESENTATIVE DYSON asked Mr. Cyr if it would be a leap of logic to infer that the administration was resisting the list of issues he mentioned in the Anchorage contract? Number 1927 MR. CYR replied he would not pretend to be a spokesperson for the administration. But, "Yes." The district was not interested in those proposals. Number 1955 REPRESENTATIVE DYSON asked Mr. Cyr if he could infer that contracting out would have a negative impact, in general, on the quality of education? Number 1984 MR. CYR replied there was research that pointed to the fact that test scores had not gone up but had gone down, therefore, education suffered over the long-range. Number 2012 REPRESENTATIVE DYSON asked Mr. Cyr if he would hold the same position on activities that were outside of the school building, such as, maintenance? Number 2034 MR. CYR replied, if it was believed that one of the functions of unionization was to make sure that the members of the union were quality employees, then it gave the public and the consumer a legitimate measure of protection that was not built in the system, otherwise. Number 2132 REPRESENTATIVE DYSON asked Mr. Cyr if the association would resist any contracting out even for school district activities that were not in the school building? Number 2146 MR. CYR said he was not sure he understood the question. Bus drivers, for example, were subcontracted and there had been some problems. There was very little quality control over who was hired. Number 2170 REPRESENTATIVE DYSON asked Mr. Cyr, if the association would resist any contracting out, even for school district services that did not have direct contact with the students, such as, maintenance of the buses? Number 2198 MR. CYR replied buses were subcontracted in most districts. But, "Yes," the association believed that every employee in a school district moved the agenda of the district and worked for the kids whether they were in a warehouse or a teacher in front of the classroom. They were all working for the children. Number 2236 CHAIR JAMES commented on the bargaining in Anchorage. In addition, the public was not happy with government, unlike Representative Elton who thought it was wonderful. Yet, they did not vote or participate because they felt it would not do any good. They were just generally dissatisfied. The NEA-Alaska was taking a different approach now. She was encouraged and happy because it was listening to the public. Number 2355 CHAIR JAMES further stated speech teachers were contracted out. Contracting out did have its merits, especially when it was not a full-time job for somebody. Number 2398 MR. CYR stated that in the past the association had not told the public what it was bargaining. It was trying now to be responsive to the public comments. MR. CYR further stated that speech teachers were not subcontracted. TAPE 97-25, SIDE A Number 0001 MR. CYR stated that mental health positions were contracted out because school districts did not have the resources to provide the in-depth psychological work that some kids needed. Number 0057 CHAIR JAMES explained that she had friends who went from school district to school district testing students who were contracted out. MR. CYR replied she was correct. Number 0091 REPRESENTATIVE ELTON pointed out that in some cases he agreed with Mr. Dillon who saw a role for government and who saw a role for government employees. "I would just like to say that that too often I think we `demonize' government employees whether they're operating under a collective bargaining agreement or not." REPRESENTATIVE ELTON further stated that the committee had not heard from one school district, municipality, borough or anyone on this issue today saying that there was a problem that needed to be addressed by the adoption of this bill. "I think that many people out there probably think that we're trying to address a problem that they don't have and if they have it they aren't telling us about it." Number 0184 CHAIR JAMES stated that the prime responsibility of government was public safety. And, the committee did talk about public safety a little while ago with a different connotation. She agreed with Representative Elton, however, she thought that the room would be full of people today since this was a controversial issue. Number 0223 MR. CYR stated that Anchorage was out of PERA so it did not have to bargain with its employees; yet, it did bargain because it found it to be the most expedient way. He also cited the city of Palmer and probably Fairbanks were out of PERA and they also bargained with their employees. "It is the most expedient way to negotiate working conditions with employees. It is the standard of the industry for that very reason. The state in its declaration of policy stated that "the legislature finds that joint decision- making is the modern way of administering government." Number 0318 REPRESENTATIVE VEZEY stated that most of the citizens of the state of Alaska did not live in a community that was covered by PERA. The municipality of Anchorage, the City and Borough of Juneau, the Mat-Su Borough, and the city of Kodiak, for example, opted out of PERA. There were approximately 18 communities in the state and some other political subdivisions that were covered by PERA. The bill was saying; therefore, to a distinct minority of Alaskans, that the way they governed themselves was not equal to the way others governed themselves. Number 0388 MR. CYR replied that all 54 school districts were covered by PERA. Every school entity in the state fell under PERA. Therefore, the bill would certainly affect the school districts and thousands of employees. CHAIR JAMES asked the committee members if they were comfortable moving the bill out of the committee today? Number 0455 REPRESENTATIVE ELTON moved to table HB 124. CHAIR JAMES called for a roll call vote. Representatives James, Dyson, Hodgins, Ivan and Vezey voted against the motion. Representatives Berkowitz and Elton voted in favor of the motion. House Bill 124 was not tabled. Number 0515 REPRESENTATIVE HODGINS moved that HB 124 move from the committee with individual recommendations and the attached fiscal note(s). Number 0524 REPRESENTATIVE ELTON objected. Number 0538 REPRESENTATIVE BERKOWITZ stated that Representative Elton made a compelling point. The bill was trying to fix a problem that no one had acknowledge existed. He had not heard from a single school district or political subdivision that said it wanted to opt out. "We can go around fixing problems that don't exist all day long. I just don't think that we ought to be sticking our nose, much less the camel's nose, under that tent." CHAIR JAMES called for a roll call vote. Representative James, Dyson, Hodgins, Ivan and Vezey voted in favor of the motion. Representatives Berkowitz and Elton voted against the motion. House Bill 124 was so moved from the House State Affairs Standing Committee. HJR 25 - CONST. AM: PERM. FUND INCOME & DIVIDEND The next order of business to come before the House State Affairs Standing Committee was HJR 25, Proposing amendments to the Constitution of the State of Alaska to guarantee the permanent fund dividend, to provide for inflation-proofing, and to require a vote of the people before spending undistributed income from the earnings reserve of the permanent fund; and relating to the permanent fund. CHAIR JAMES called for a brief at east at 9:46 a.m. CHAIR JAMES called the House State Affairs Standing Committee back to order at 9:48 a.m. CHAIR JAMES called on Representative Alan Austerman, sponsor of HJR 25, to present the resolution. Number 0680 REPRESENTATIVE ALAN AUSTERMAN, Alaska State Legislature, explained that over the last two and one-half years, since he had been a legislator, the first thing out of people's mouth was to leave the dividend alone when discussing a balanced budget. When he tried to explain the parameters of the permanent fund dividend program and how it was set up, the people had a hard time understanding because their dividend was part of the Permanent Fund. "When you mention dividend all they think about is Permanent Fund. And, they don't associate the difference in how the dividend program is set up within the Permanent Fund." Therefore, his frustration, as well as discussions with Senator Lyda Green, author of a similar senate bill, and her staff, he volunteered to introduce a similar bill in the House. REPRESENTATIVE AUSTERMAN explained that HJR 25 proposed amending the state constitution to guarantee the dividend checks to the people of the state. The interest earnings were used three ways: For the paying of the dividend, for inflation proofing and for the undistributed interest earnings. When he talked to people about the original intend of the Permanent Fund, to help balance the budget as oil revenues declined; they said, "Don't touch my dividend program." It was hard to have a good conversation with the people because they assumed one was attacking the dividend program. REPRESENTATIVE AUSTERMAN explained that HJR 25 said inflation proofing and the dividend program could not be touched by the legislature without the vote of the people. Under current statute, the dividend program, inflation proofing and the spending of the undistributed interest earnings were set so that legislators could eliminate the program. Most people thought that they were already protected by a vote of the people. In conclusion, he introduced the resolution to give the people a comfort level and to give them a say in whether the legislators could touch or spend their dividend, the inflation proofing or the undistributed interest earnings. He explained he would introduce a committee substitute to leave the undistributed interest earnings in statute, if it was needed to balance the budget at some point in time, for example. Number 1047 CHAIR JAMES asked Representative Austerman if the permanent fund dividend program was first and then inflation-proofing or did he turn it around? Number 1058 REPRESENTATIVE AUSTERMAN replied it was left exactly the way it was in statute now. The dividend program and how the funds were used were number one. Number 1065 REPRESENTATIVE HODGINS asked to be excused from the meeting. He was chairman of another committee that was starting soon. Number 1078 REPRESENTATIVE VEZEY said he did not hear more about a subject when he was campaigning than the Permanent Fund. Therefore, he moved that HJR 25 move from the committee. CHAIR JAMES agreed with Representative Vezey, but more discussion was needed. She assumed he was being factitious. Number 1105 REPRESENTATIVE DYSON said her assumption was unwarranted. CHAIR JAMES said the resolution did have two more committees of referral. It could be moved out of the committee, if that was the will of the members. Number 1115 REPRESENTATIVE VEZEY moved that HJR 25 move from the committee with individual recommendations and the attached fiscal note(s). Number 1118 REPRESENTATIVE BERKOWITZ objected. He was concerned that the resolution would jeopardize the Permanent Fund, therefore, he would like to hear more about it. "If we vote on it now, we're basically pushing $20 billion out the door without listening to it." CHAIR JAMES said she and Representative Berkowitz would hear it again in the House Judiciary Standing Committee. REPRESENTATIVE BERKOWITZ replied he was just concerned about everyone's political self-interest. "I wouldn't want them to have to go back to their districts and have to hear how they missed the opportunity on protecting the Permanent Fund." Number 1173 REPRESENTATIVE AUSTERMAN said he had anticipated more discussion in this committee. He would prefer that the committee members look at the committee substitute before moving the resolution out of the committee. CHAIR JAMES stated there was not enough time today to move the bill out. It would be scheduled again for Thursday, March 13, 1997. Number 1219 REPRESENTATIVE VEZEY noted, for the record, that Representative Austerman held his own bill up. Number 1231 JIM KELLY, Research and Liaison Officer, Alaska Permanent Fund Corporation, Department of Revenue, was the first person to testify in Juneau. Any decisions on how to use the Permanent Fund income were rightly placed with the legislature and the executive branch, and not with the Board of Trustees. However, there was a connection between distribution policy and investment policy which had evolved over the years. The Permanent Fund had been blessed with some very favorable financial markets for the last decade or so, and as it moved higher and higher into equities it had experienced good volatilities. It had not experienced, however, when equity markets fell dramatically. Therefore, to put a distribution policy into the constitution and to expect it to work for the next 20 years was not correct. The world would be a different place in the next 20 years and the investment markets would perform differently. Therefore, the board would like the opportunity to look at the options and the alternatives available, and even some distribution policies that existed, so that a change would not have any unintended negative consequences. Many of these issues were discussed in the letter from Michael J. O'Leary, Jr., Executive Vice President, Callan Associates, dated March 10, 1997. There was also a letter addressing the concerns of the tax-exempt status of the Permanent Fund and the possible consequences of the resolution. The corporation wanted to help the legislature calculated the income available for distribution and still protect and grow the Permanent Fund principle. "You all hear about the dividend end of it. We spend our time looking at the investment of the principle part." Number 1403 CHAIR JAMES stated that she had the feeling that inflation-proofing should be done first before the dividend. Number 1410 MR. KELLY replied the Board of Trustees had supported that in the past and would probably view it favorably in the future. Number 1416 CHAIR JAMES said that the earnings had been put back in a number of times and that the legislature had made deposits over and above its requirement creating the argument of pre-inflation-proofing. She asked Mr. Kelly if he agreed with the argument? Number 1434 MR. KELLY replied he would not agree with that according to the reading of the statute. The statute required inflation-proofing every year and it spelled out how it would happen. Number 1447 CHAIR JAMES explained there were projections in 1993 that by the time dividends and inflation-proofing were paid there would not be enough for inflation-proofing in the long-haul. She did not quite buy that argument at the time, but there was the potential for that under the current program. MR. KELLY replied that the board's consultant said over a rolling five year period, 21 percent of time there was no real income, zero income. It was not only possible that there would not be money for inflation-proofing, but there might not be money for dividends as well because the distribution policy was based on realized income. There were other ways to do it to minimize the impact, of which, the Board of Trustees continued to look at. He suggested that the legislature look at it as well. Number 1509 CHAIR JAMES explained she was scared of the stock market because she was born one month after the crash in 1929. Therefore, she was very concerned about a crash, despite protections and improved technology. She was pleased with the Board of Trustees and its decisions, however. Number 1587 CHAIR JAMES announced the resolution would be held over to Thursday, March 13, 1997. ADJOURNMENT Number 1596 CHAIR JAMES adjourned the House State Affairs Standing Committee meeting at 10:06 a.m.