Legislature(2005 - 2006)CAPITOL 106

03/29/2005 08:00 AM STATE AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Moved CSHB 183(STA) Out of Committee
Heard & Held
Scheduled But Not Heard
Scheduled But Not Heard
+ House State Affairs Draft Legislation Re: TELECONFERENCED
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                    ALASKA STATE LEGISLATURE                                                                                  
             HOUSE STATE AFFAIRS STANDING COMMITTEE                                                                           
                         March 29, 2005                                                                                         
                           8:05 a.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Paul Seaton, Chair                                                                                               
Representative Carl Gatto, Vice Chair                                                                                           
Representative Jim Elkins                                                                                                       
Representative Jay Ramras                                                                                                       
Representative Berta Gardner                                                                                                    
MEMBERS ABSENT                                                                                                                
Representative Bob Lynn                                                                                                         
Representative Max Gruenberg                                                                                                    
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 201                                                                                                              
"An Act relating to an  application for a permanent fund dividend                                                               
for a member of the armed  forces of the United States serving on                                                               
active duty outside of the  state; and providing for an effective                                                               
     - HEARD AND HELD                                                                                                           
HOUSE BILL NO. 183                                                                                                              
"An Act relating to the  use of campaign contributions for shared                                                               
campaign  activity   expenses  and  to  reimbursement   of  those                                                               
     - MOVED CSHB 183(STA) OUT OF COMMITTEE                                                                                     
HOUSE BILL NO. 170                                                                                                              
"An Act relating  to the qualifications of public  members of the                                                               
Public  Employees'  Retirement  Board and  the  Alaska  Teachers'                                                               
Retirement Board."                                                                                                              
     - HEARD AND HELD                                                                                                           
HOUSE BILL NO. 177                                                                                                              
"An Act  relating to employee  and employer contributions  to the                                                               
teachers' retirement system and  the public employees' retirement                                                               
system; and providing for an effective date."                                                                                   
     - SCHEDULED BUT NOT HEARD                                                                                                  
HOUSE BILL NO. 191                                                                                                              
"An Act relating to defined contribution systems for members of                                                                 
the teachers' retirement system and the public employees'                                                                       
retirement system; and providing for an effective date."                                                                        
     - SCHEDULED BUT NOT HEARD                                                                                                  
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 201                                                                                                                  
SHORT TITLE: PERM. FUND DIVIDEND APPS OF MILITARY                                                                               
SPONSOR(S): REPRESENTATIVE(S) CHENAULT                                                                                          
03/04/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/04/05       (H)       MLV, STA                                                                                               
03/17/05       (H)       MLV AT 1:00 PM CAPITOL 124                                                                             
03/17/05       (H)       Moved Out of Committee                                                                                 
03/17/05       (H)       MINUTE(MLV)                                                                                            
03/18/05       (H)       MLV RPT 6DP                                                                                            
03/18/05       (H)       DP: THOMAS, GRUENBERG, CISSNA, ELKINS,                                                                 
                         MCGUIRE, LYNN                                                                                          
03/29/05       (H)       STA AT 8:00 AM CAPITOL 106                                                                             
BILL: HB 183                                                                                                                  
SHORT TITLE: CAMPAIGN FINANCE: SHARED EXPENSES                                                                                  
SPONSOR(S): REPRESENTATIVE(S) HAWKER                                                                                            
02/28/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/28/05       (H)       STA, JUD                                                                                               
03/29/05       (H)       STA AT 8:00 AM CAPITOL 106                                                                             
BILL: HB 170                                                                                                                  
SHORT TITLE: PUB EMPLOYEES/TEACHERS RETIREMENT BOARDS                                                                           
SPONSOR(S): REPRESENTATIVE(S) KELLY                                                                                             
02/23/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/23/05       (H)       STA, FIN                                                                                               
03/22/05       (H)       STA AT 8:00 AM CAPITOL 106                                                                             
03/22/05       (H)       Heard & Held                                                                                           
03/22/05       (H)       MINUTE(STA)                                                                                            
03/29/05       (H)       STA AT 8:00 AM CAPITOL 106                                                                             
WITNESS REGISTER                                                                                                              
SHARALYN WRIGHT, Staff                                                                                                          
to Representative Mike Chenault                                                                                                 
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION   STATEMENT:     Introduced   HB   201   on  behalf   of                                                               
Representative Chenault, sponsor.                                                                                               
SHARON BARTON, Director                                                                                                         
Permanent Fund Dividend Division                                                                                                
Alaska Department of Revenue                                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions  regarding the PFD and HB
CHRIS POAG                                                                                                                      
Civil Division                                                                                                                  
Alaska Department of Law                                                                                                        
POSITION STATEMENT:  Answered  questions regarding the legalities                                                               
of HB 201.                                                                                                                      
REPRESENTATIVE MIKE HAWKER                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 183 as sponsor.                                                                               
BROOKE MILES, Executive Director                                                                                                
Alaska Public Offices Commission (APOC)                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions  on behalf of APOC during                                                               
the hearing on HB 183.                                                                                                          
HEATH HILYARD, Staff                                                                                                            
to Representative Mike Kelly                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Reviewed the previous discussion  of HB 170                                                               
from prior hearings on behalf of Representative Kelly, sponsor.                                                                 
PAT WELLINGTON, Elected member                                                                                                  
Public Employees' Retirement (PERS) Board                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Testified and answered  questions on behalf                                                               
of the PERS Board during the hearing on HB 170.                                                                                 
JAY DULANY                                                                                                                      
Eagle River, Alaska                                                                                                             
POSITION STATEMENT:   Testified on  behalf of himself  during the                                                               
hearing on HB 170.                                                                                                              
KEVIN RITCHIE                                                                                                                   
Alaska Municipal League (AML)                                                                                                   
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Testified and answered  questions on behalf                                                               
of AML during the hearing on HB 170.                                                                                            
SAM TRIVETTE, President                                                                                                         
Retired Public Employees of Alaska (RPEA)                                                                                       
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Testified  on behalf  of  RPEA during  the                                                               
hearing on HB 170.                                                                                                              
ACTION NARRATIVE                                                                                                              
CHAIR  PAUL  SEATON  called  the  House  State  Affairs  Standing                                                             
Committee  meeting  to  order at  8:05:00  AM.    Representatives                                                             
Elkins, Gatto,  Gardner, and Seaton  were present at the  call to                                                               
order.   Representative  Ramras  arrived as  the  meeting was  in                                                               
8:06:31 AM                                                                                                                    
CHAIR SEATON  discussed the  meeting on Thursday,  March 24.   He                                                               
clarified   that   the   committee  members   made   side-by-side                                                               
comparisons  of other  bills towards  producing  the House  State                                                               
Affairs Standing Committee's forthcoming PERS/TRS bill.                                                                         
HB 201-PERM. FUND DIVIDEND APPS OF MILITARY                                                                                   
8:07:28 AM                                                                                                                    
CHAIR  SEATON announced  that  the first  order  of business  was                                                               
HOUSE BILL  NO. 201,  "An Act  relating to  an application  for a                                                               
permanent fund dividend  for a member of the armed  forces of the                                                               
United States  serving on active  duty outside of the  state; and                                                               
providing for an effective date."                                                                                               
8:07:29 AM                                                                                                                    
SHARALYN WRIGHT,  Staff to  Representative Mike  Chenault, Alaska                                                               
State Legislature, introduced HB  201 on behalf of Representative                                                               
Chenault, sponsor.   She explained  that the purpose of  the bill                                                               
is to permit a  person who has a power of  attorney for an active                                                               
military  duty person  who's stationed  outside of  the State  of                                                               
Alaska to sign  and file an Alaska Permanent  Fund Dividend (PFD)                                                               
application for  the said individual.   She presented  an example                                                               
of an  Alaskan man stationed  in Japan  who was then  deployed to                                                               
Afghanistan,  and the  PFD  Division could  not  contact him;  he                                                               
didn't know  that there  was a problem  with his  PFD application                                                               
until he returned to Alaska.                                                                                                    
MS. WRIGHT continued:                                                                                                           
     So if someone  back home had a power  of attorney, that                                                                    
     power of  attorney allows you to  make absolutely life-                                                                    
     changing decisions:  you can  sign for a  bank account,                                                                    
     you can  sign for real  estate, you can make  all kinds                                                                    
     of decisions.   And in  the whole scope of  things, the                                                                    
     [PFD] shouldn't  fit at the  top or the bottom  of that                                                                    
     list; it  should fit somewhere  in the middle.   And we                                                                    
     should allow someone ... who's  a trusted person in the                                                                    
     military  person's   life,  ...  to  sign   that  [PFD]                                                                    
     application so that  [the PFD check] comes  in a timely                                                                    
8:09:35 AM                                                                                                                    
REPRESENTATIVE GARDNER  remarked that there is  the potential for                                                               
problems if one  or more persons applies on behalf  of the person                                                               
who's  on active  duty.    She asked  what  would  happen if  the                                                               
service person  never got the  money because someone  else signed                                                               
for the PFD check and took it.                                                                                                  
MS.  WRIGHT   replied,  "I  would   not  imagine   a  responsible                                                               
individual having  more than one  power of attorney,  ... because                                                               
when you have a power of  attorney and you decide to change that,                                                               
you  also  are   required  to  revoke  any   previous  powers  of                                                               
8:11:06 AM                                                                                                                    
CHAIR  SEATON  commented  that  the bill  would  only  allow  the                                                               
individual with the  power of attorney to apply for  the PFD.  He                                                               
asked  who  would be  held  responsible  for  fraud if  a  person                                                               
applied  for  a PFD  on  behalf  of  another  person who  is  not                                                               
eligible to receive the PFD.                                                                                                    
MS.  WRIGHT responded  that she  believed that  this issue  would                                                               
dealt with by the PFD Division.                                                                                                 
8:13:23 AM                                                                                                                    
SHARON  BARTON,  Director,   Permanent  Fund  Dividend  Division,                                                               
Alaska  Department of  Revenue, explained  that when  filling out                                                               
the PFD  application, the power  of attorney is attesting  to all                                                               
of the information  on the application being true so  far as that                                                               
person knows it to be true.                                                                                                     
CHAIR SEATON asked if the PFD  Division sees any problems with HB
MS. BARTON replied that logistically  the division has no problem                                                               
with  the bill,  as it  won't  put a  large new  workload on  the                                                               
personnel.    She noted  that  the  division is  concerned  about                                                               
possible fraud situations.  In addition, she pointed out:                                                                       
     We are  also concerned  about it being  offered broadly                                                                    
     to  all  military.   Our  military  members across  the                                                                    
     world   are   filing   very   successfully   this   ...                                                                    
     application period  for their dividends.   We know that                                                                    
     those folks  in Iraq or Afghanistan,  places like that,                                                                    
     don't  have  the  ready  access  to  mail  and  to  the                                                                    
     Internet, although  they do,  almost all of  them, have                                                                    
     access eventually. ...  We have a lot  of support built                                                                    
     into  our  processing system  now  to  allow plenty  of                                                                    
     time,   all  the   time  they   need,   to  get   their                                                                    
     applications  in when  they return  to a  place in  the                                                                    
     world  they  can file  or  can  supply that  additional                                                                    
     information  they  need.    But  if  the  committee  is                                                                    
     interested  in   making  this  available   to  military                                                                    
     members, we  would ask  that you  consider at  any rate                                                                    
     restricting it to those who  are receiving hostile fire                                                                    
     or imminent danger pay....                                                                                                 
8:16:59 AM                                                                                                                    
CHAIR SEATON asked  if Ms. Barton had any  suggested language for                                                               
MS. BARTON responded that she did  not have it with her but would                                                               
be available to work on the language for an amendment.                                                                          
8:17:39 AM                                                                                                                    
REPRESENTATIVE GARDNER asked Ms. Barton  if she was implying that                                                               
she didn't see the need for this bill.                                                                                          
MS.  BARTON  answered that  division  personnel  have heard  some                                                               
complaints from people who have  been frustrated with the current                                                               
system, mostly  from family members  of the  military servicemen.                                                               
She noted  that she personally  only knew of one  particular such                                                               
case.   She said, "Staff  tell me when  I poll them  that they've                                                               
been  able to  work through  every situation  with the  calls and                                                               
letters and emails that they've  received about the military. ...                                                               
It mostly  has to do  with the delay  in receiving the  PFD check                                                               
when they  get back  to the  States. ...  But in  no case  are we                                                               
denying anyone."                                                                                                                
REPRESENTATIVE RAMRAS  commented that he  felt HB 201  would make                                                               
it easier for military personnel that  are in harm's way to apply                                                               
for the PFD.                                                                                                                    
8:20:08 AM                                                                                                                    
CHRIS POAG, Civil Division, Alaska Department of Law, explained:                                                                
     A typical  power of  attorney has  two parties:   one's                                                                    
     the principal  - that's  the person  who's represented,                                                                    
     the military person who goes  overseas; and the other's                                                                    
     the  agent, or  attorney-in-fact  -  that's the  person                                                                    
     who's going  to do  any benefit applications  on behalf                                                                    
     of the  principal.  In  that scenario, ...  the agent's                                                                    
     responsible   in   a    [PFD]   application   to   make                                                                    
     representations about  whether or not the  principal is                                                                    
     in fact  eligible. ... We  have to assume  that they'll                                                                    
     get  that  information   directly  from  the  principal                                                                    
     instead of from  some sort of second-hand  source.  But                                                                    
     when  they  make  that  information  available  in  the                                                                    
     application and they turn that  application in, it more                                                                    
     becomes a  question probably in a  prosecution sense of                                                                    
     who made the representation.                                                                                               
MR. POAG explained  that either the principal  provided the agent                                                               
with  false information,  or  the  agent made  a  mistake on  the                                                               
application.     Fraud  refers  to  false   information  that  is                                                               
purposefully  provided,  he   noted,  not  unknowingly  provided.                                                               
Under HB 201, he said:                                                                                                          
     This is just  going to be very hard,  if not impossible                                                                    
     to  prosecute  because  you're  going  to  have  people                                                                    
     pointing the  finger at each other  saying, 'Well, they                                                                    
     told  me this,'  and 'They  told  me that.'   And  it's                                                                    
     going  to be  real hard  to prove  beyond a  reasonable                                                                    
     doubt    that    anybody     knowingly    made    false                                                                    
     representations in that [PFD].   So I think pretty much                                                                    
     we'll  be giving  up any  prosecutions in  these cases.                                                                    
     It would be very difficult to do otherwise.                                                                                
8:22:07 AM                                                                                                                    
MR. POAG continued:                                                                                                             
     As you know, when you  file for your [PFD] application,                                                                    
     you have to make  a representation that the information                                                                    
     is correct,  and that  you intend  to remain  in Alaska                                                                    
     indefinitely, or,  if you're  Outside, that  you intend                                                                    
     to return and remain  indefinitely.  Obviously an agent                                                                    
     on  behalf  of  a   principal  can't  make  intentional                                                                    
     statements for them.   So we also gave  up that portion                                                                    
     of our application requirement.                                                                                            
8:23:54 AM                                                                                                                    
REPRESENTATIVE GATTO stated  that a crooked person  could file as                                                               
power of attorney for someone and  have the PFD check placed into                                                               
his or her own account.  He  asked what the PFD Division could do                                                               
about this.                                                                                                                     
MR. POAG replied:                                                                                                               
     It depends a  lot on the form of the  power of attorney                                                                    
     that's been drafted.  And  it depends probably a little                                                                    
     bit on the  way this legislation's drafted as  well.  A                                                                    
     typical power  of attorney that has  normal powers, not                                                                    
     specific powers,  ... would be entitled  to [have] that                                                                    
     check ...  put into  the account that  they designated;                                                                    
     they are [the]  agent, they make decisions  as to where                                                                    
     the  money goes  and how  it's spent  and all  of those                                                                    
     sorts of decisions.   So that crooked  person could end                                                                    
     up with [the principal's] PFD in their [own] account.                                                                      
REPRESENTATIVE GATTO asked who becomes  the liable person in this                                                               
MR.  POAG  replied   that  it  would  depend  on   who  made  the                                                               
misrepresentation.   He  commented  that the  state  will have  a                                                               
difficult  time  determining which  one  was  lying if  they  are                                                               
blaming one another.                                                                                                            
8:25:54 AM                                                                                                                    
MR.  POAG, in  response to  Representative Gatto,  stated that  a                                                               
person cannot fill out a PFD application for his/her spouse.                                                                    
REPRESENTATIVE  GATTO  commented  that  the bill  would  then  be                                                               
saying that the power of attorney trumps marriage.                                                                              
MR. POAG responded:                                                                                                             
     I  think this  is probably  why ...  allowing power  of                                                                    
     attorneys  has  been a  sort  of  a guarded  exception.                                                                    
     It's been  for, essentially,  a parent  on behalf  of a                                                                    
     child [to  make] ... representations  as to  whether or                                                                    
     not their child  intends to return or  remain in Alaska                                                                    
     and  stay there  indefinitely.   And this  [bill] is  a                                                                    
     situation  where we're  broadening  the  scope of  that                                                                    
MR.  POAG pointed  out that  current  law allows  for a  military                                                               
person to late file after he/she has returned from the hot zone.                                                                
8:28:05 AM                                                                                                                    
REPRESENTATIVE  RAMRAS  stated  that  Fort  Wainwright  and  Fort                                                               
Richardson will both  be having large deployments  this year, and                                                               
he saw  that the deployment  newsletters address issues  like how                                                               
to  give one's  spouse  the  power of  attorney.    He asked  for                                                               
confirmation  that the  bill  would make  the  power of  attorney                                                               
applicable specifically  to the  PFD because  it comes  under the                                                               
purview of the State of Alaska.                                                                                                 
MR.  POAG  replied  that  current  PFD law  says  that  only  the                                                               
individual  can apply  for  his  or her  own  PFD,  and the  only                                                               
exceptions  for that  are  for a  child or  for  somebody who  is                                                               
incapacitated.   He  stated  that  HB 201  would  create a  third                                                               
exception for military  persons.  He noted, "The  bill as drafted                                                               
doesn't have  any 'hot zone'  language.   As drafted it  would be                                                               
anybody in the military outside of the United States."                                                                          
8:29:25 AM                                                                                                                    
REPRESENTATIVE  RAMRAS commented  that  this  was a  particularly                                                               
timely bill because  of the large deployments  scheduled for this                                                               
REPRESENTATIVE GARDNER  asked if there  is any reason  that those                                                               
individuals being deployed  this fall couldn't apply  for the PFD                                                               
before they leave.                                                                                                              
MR. POAG replied that they can  apply between January 1 and March                                                               
8:30:36 AM                                                                                                                    
REPRESENTATIVE GARDNER  asked if  a military person  doesn't come                                                               
back, for  any reason,  if the  spouse or  power of  attorney can                                                               
continue  to apply  for the  PFD on  behalf of  that person  year                                                               
after year.                                                                                                                     
MR. POAG replied  that if the principal  abandoned his/her intent                                                               
to  return to  Alaska, then  the agent  or spouse  should not  be                                                               
filing on  the principal's behalf.   He stated that if  the agent                                                               
was  representing  in  the application  that  the  principal  was                                                               
outside of  Alaska, at some  point the principal would  no longer                                                               
qualify  for an  Outside allowable  absence exception.   He  said                                                               
that if  the language of this  bill were to be  drafted such that                                                               
the agent  can only file while  the principal is in  the hot zone                                                               
outside  of the  United States,  then  that would  at some  point                                                               
expire, and  the agent would probably  be caught.  He  noted, "It                                                               
would depend on the drafting of this bill."                                                                                     
8:32:12 AM                                                                                                                    
MR. POAG,  in response  to Chair Seaton,  reiterated that  as the                                                               
bill  is  currently drafted,  it  allows  anyone on  active  duty                                                               
outside  of  the  United  States  to apply  through  a  power  of                                                               
attorney, even  if the  individual is  not in a  hot zone  and is                                                               
gone for a long  time.  He said that if the  bill were limited to                                                               
hot  zones,  it   would  be  easier  for  the   PFD  Division  to                                                               
investigate possible frauds.                                                                                                    
8:33:14 AM                                                                                                                    
REPRESENTATIVE GATTO  asked if  there is any  place in  the world                                                               
that does not qualify as a hot zone.                                                                                            
MR. POAG  replied that as he  understood it, being in  a hot zone                                                               
would require a person to qualify  for a certain type of military                                                               
pay status.                                                                                                                     
REPRESENTATIVE GATTO  asked if  the term  "hot zone"  is actually                                                               
MR.  POAG replied  yes;  it's  an official  pay  status that  one                                                               
receives in the military.                                                                                                       
CHAIR SEATON closed public testimony.                                                                                           
8:34:32 AM                                                                                                                    
CHAIR  SEATON  asked Ms.  Wright  to  address  the issue  of  the                                                               
inability to  enforce an  intent to return  provision if  the PFD                                                               
application is completed through a power of attorney.                                                                           
MS. WRIGHT  presented an example  of an individual  who defrauded                                                               
the  PFD  Division  and  was reported,  but  the  division  never                                                               
pursued the case.  She said, "I  guess in life we have to realize                                                               
that if somebody  is out to circumvent the  system, they're going                                                               
to circumvent it  no matter what rule we come  up with, no matter                                                               
what changes  we make."  She  reiterated that the purpose  of the                                                               
bill is to allow the military  personnel to have an easier way to                                                               
apply  for the  PFD.   She  noted that  hot zone  pay can  change                                                               
quickly.  She said, "I  strongly believe this 'hot zone' language                                                               
should not be  in [the bill]."   Representative Chenault's office                                                               
devotes a lot of time to military-PFD problems, she stated.                                                                     
8:38:51 AM                                                                                                                    
REPRESENTATIVE ELKINS  asked why  the power of  attorney couldn't                                                               
specify that it was only good for applying for the dividend.                                                                    
MS.  WRIGHT answered  that  there  is an  area  on  the power  of                                                               
attorney  [application] that  would allow  a person  to write  in                                                               
that the agent has permission to file for a PFD.                                                                                
8:40:46 AM                                                                                                                    
REPRESENTATIVE RAMRAS  reiterated that soldiers from  Alaska will                                                               
be deployed overseas  this year and the  military has recommended                                                               
that the  soldiers set  up a  power of  attorney.   He emphasized                                                               
that the bill should be passed quickly.                                                                                         
MS.  WRIGHT concurred  with Representative  Ramras  and said  the                                                               
bill is  long overdue.   She  said, "We  have afforded  the [PFD]                                                               
Division  every opportunity.    At the  beginning  of session  we                                                               
brought them in, told them what  the problem was, gave them every                                                               
opportunity to repair it, and [they] chose not to."                                                                             
8:42:30 AM                                                                                                                    
REPRESENTATIVE GARDNER said  that she applauds the  effort of the                                                               
bill,  but she  wonders if  a better  plan would  be to  make the                                                               
application available early for people who are leaving.                                                                         
MS. BARTON  replied that Representative Gardner's  proposal could                                                               
perhaps be  worked into the law.   She noted that  the problem is                                                               
that the  eligibility period  covers the full  year prior  to the                                                               
dividend, from January  1 to December 31.  If  someone filled out                                                               
the  application in  August, "it's  unknown what  might occur  to                                                               
them between August  and January as far as  their eligibility for                                                               
the dividend."   The  law requires that  the applicant  attest to                                                               
the fact  that during the  prior eligibility year  certain things                                                               
have been true, she said.                                                                                                       
8:44:35 AM                                                                                                                    
CHAIR  SEATON requested  that for  the next  hearing, Ms.  Barton                                                               
present  data  on  the  number  of  applications  that  have  had                                                               
problems on this particular aspect  of the PFD application "so we                                                               
have a good handle on the  numbers and those that were denied, or                                                               
missed or filed late under the current existing law."                                                                           
8:44:54 AM                                                                                                                    
MS.  BARTON, in  response to  Representative Gatto,  replied that                                                               
under  the law,  a person  would  be committing  fraud if  he/she                                                               
filled out a spouse's application with the spouse's e-signature.                                                                
[HB 201 was heard and held.]                                                                                                    
HB 183-CAMPAIGN FINANCE: SHARED EXPENSES                                                                                      
8:45:53 AM                                                                                                                    
CHAIR SEATON announced that the  next order of business was HOUSE                                                               
BILL  NO.  183,   "An  Act  relating  to  the   use  of  campaign                                                               
contributions  for  shared  campaign  activity  expenses  and  to                                                               
reimbursement of those expenses."                                                                                               
8:45:57 AM                                                                                                                    
REPRESENTATIVE MIKE HAWKER, Alaska  State Legislature, as sponsor                                                               
of  HB 183,  said the  bill is  a common  sense fix  that affects                                                               
every person  running for office in  the state of Alaska.   Under                                                               
current  statute, he  said, a  vendor has  to break  a bill  into                                                               
separate  components and  each candidate  has to  pay separately.                                                               
The proposed  legislation would  allow one  candidate to  pay the                                                               
bill,  as  long  as  the  other  candidates  involved  completely                                                               
reimburse their share  of that expense within 48 hours.   He said                                                               
the decision  to make it  48 hours  is reasonable.   He indicated                                                               
that what usually happens is  that one candidate writes the check                                                               
and   the  other   candidates  hand   him/her   a  check   almost                                                               
simultaneously  for  ease of  record  keeping.   The  bill  would                                                               
clearly place the responsibility  for campaign finance compliance                                                               
upon the candidates themselves.                                                                                                 
8:48:34 AM                                                                                                                    
REPRESENTATIVE HAWKER  said that  Legislative Legal  and Research                                                               
Services  has  recommended  the  format  in  which  the  bill  is                                                               
written, specifically listing  what candidates "may not  do."  He                                                               
offered further  details.  He noted  that there is a  zero fiscal                                                               
note in the committee packet.                                                                                                   
8:49:08 AM                                                                                                                    
REPRESENTATIVE GARDNER  agreed that  the concept  of the  bill is                                                               
common sense.   Notwithstanding  that, she directed  attention to                                                               
page  2, line  17, which  would  require that  the candidate  [or                                                               
group participating  in the activity] "receives,  within 48 hours                                                           
after  payment  of the  expense,  complete  reimbursement of  the                                                           
amount  of  campaign  contributions  used for  payments  made  on                                                           
behalf  of  another  candidate  or  group  participating  in  the                                                           
activity."    She said  her  concern  is  that  if she  were  the                                                           
candidate  responsible  for  receiving   that  money,  she  can't                                                               
control when  the others reimburse  her.   She said she  can only                                                               
control when she asks them for the money.                                                                                       
8:50:06 AM                                                                                                                    
REPRESENTATIVE  HAWKER  said Alaska  has  some  of the  strictest                                                               
campaign  finance laws  in  the U.S.   He  stated  his intent  in                                                               
crafting the  bill was  to be  careful not  to create  a loophole                                                               
that would be too wide, but  rather to make a specific provision.                                                               
He explained, "We  didn't want to have an open  window that would                                                               
allow candidate  A to make a  payment that candidate B  could get                                                               
around to paying  sometime, someday, a month in the  future."  He                                                               
said it's a judgment call.                                                                                                      
8:51:03 AM                                                                                                                    
REPRESENTATIVE  GARDNER clarified  that the  bill should  specify                                                               
that the  debtor is  in violation  in law  if he/she  doesn't pay                                                               
within 48 hours.                                                                                                                
REPRESENTATIVE HAWKER said that's worth considering.                                                                            
8:51:39 AM                                                                                                                    
CHAIR SEATON  said he  can foresee  that 48  hours might  be [too                                                               
short] a  period, depending on  weekend timing and  mail delivery                                                               
8:51:56 AM                                                                                                                    
REPRESENTATIVE GATTO  said he is looking  for a way a  person may                                                               
attempt to  conceal a campaign  contribution by paying  the other                                                               
person substantially  more than  a fair  share of  the bill.   He                                                               
said  it  would be  much  more  difficult  to track  because  the                                                               
payment is  not made to the  vendor and there is  no paper trail.                                                               
He spoke of having 60 days to pay  a vendor versus the 48 days to                                                               
pay a  candidate.   He asked,  "This is an  option rather  than a                                                               
requirement, right?"                                                                                                            
8:53:32 AM                                                                                                                    
REPRESENTATIVE  HAWKER  confirmed  that "this  just  provides  an                                                               
option."   He  said each  expense needs  to be  documented by  an                                                               
invoice,  and   each  candidate  is  required   to  maintain  the                                                               
documentary  evidence  of  his/her  expenditures.   The  way  the                                                               
campaign law is  structured, the prohibition is  against making a                                                               
contribution to  another candidate or  group.  He added,  "We had                                                               
to structure  this exemption within  the framework of  an overall                                                               
law that prohibits making contributions."   Regarding getting the                                                               
reimbursement in a situation where there  is a bill from a vendor                                                               
that can be  unpaid for 60 days, the trigger,  for example, would                                                               
be when the person pays on  behalf of another candidate.  In that                                                               
instance, he/she  would then have 48  hours to be paid  back.  He                                                               
added, "We're not creating two different time cycles here."                                                                     
8:54:46 AM                                                                                                                    
BROOKE   MILES,  Executive   Director,   Alaska  Public   Offices                                                               
Commission (APOC),  noted that the  commission reviewed  the bill                                                               
at its  last meeting  and understands  the practical  reasons for                                                               
it, since  the current law is  so restrictive.  She  said APOC is                                                               
"fine with  the bill,"  although it takes  a neutral  position on                                                               
it.   She said  the bill  speaks to candidates  and groups.   She                                                               
pointed out  that it is  common for political candidates  to join                                                               
together to share  a campaign activity, but it is  not common for                                                               
groups to do  so.  Because of that, she  suggested only providing                                                               
the exemption for candidates.                                                                                                   
8:57:16 AM                                                                                                                    
MS MILES, in  response to a question from Chair  Seaton, said the                                                               
repayment  time  for  expenditures  that  a  candidate  makes  on                                                               
his/her   own   behalf   is   "reasonably   consistent   business                                                               
practices."   In other  words, whatever the  vendor allows.   She                                                               
noted that  most standard business  practices don't go  beyond 60                                                               
8:57:38 AM                                                                                                                    
CHAIR SEATON, regarding "other  timing," stated his understanding                                                               
that  if   a  candidate  makes  personal   expenditures,  his/her                                                               
campaign has to repay that amount within 72 hours.                                                                              
8:58:00 AM                                                                                                                    
MS.  MILES  answered that's  correct.    She  added that  if  the                                                               
committee thinks  it would  be more reasonable  to expand  the 48                                                               
hours to  a 72-hour  period, she doesn't  think that  would cause                                                               
the commission concern either.                                                                                                  
8:58:13 AM                                                                                                                    
REPRESENTATIVE  GATTO asked  how APOC  would treat  "in a  timely                                                               
manner" rather than within 48 hours.                                                                                            
8:58:23 AM                                                                                                                    
MS.  MILES replied  that APOC  wouldn't have  a problem,  but she                                                               
stated  concern   that  there  may  be   public  perception  that                                                               
candidates  are  "landing"  money  or  giving  money  to  another                                                               
candidate, which she said are  practices that those interested in                                                               
campaign finance reform are trying to stop.                                                                                     
8:59:01 AM                                                                                                                    
CHAIR SEATON  asked the sponsor if  he has any objection  to [Ms.                                                               
Miles' suggestion to only provide the exemption to candidates].                                                                 
8:59:17 AM                                                                                                                    
REPRESENTATIVE  HAWKER   noted  that   a  conjunction   is  used:                                                               
"candidate  or group".   He  said, "So,  we have  not in  any way                                                               
invaded the  other provisions of statute  which specifically make                                                               
those   prohibitions  against   partnering  between   groups  and                                                               
CHAIR SEATON  asked Representative Hawker  if he could  give some                                                               
examples of when  there would be different groups  that would "be                                                               
having this shared activity."                                                                                                   
REPRESENTATIVE  HAWKER  speculated   perhaps  during  joint  fund                                                               
raising or a joint media expense.                                                                                               
9:01:15 AM                                                                                                                    
REPRESENTATIVE RAMRAS  suggested that a situation  in which there                                                               
was  a majority  House  fundraiser  including several  individual                                                               
candidates  would  be  the  mixing of  a  group  and  individual,                                                               
because  there would  be the  opportunity  for specific  campaign                                                               
donations to  an individual  candidate as well  as for  the House                                                               
9:01:39 AM                                                                                                                    
REPRESENTATIVE HAWKER stated his  understanding that that sort of                                                               
an action would be prohibited under  current statute.  He said he                                                               
would  defer to  APOC  for  a more  correct  interpretation.   He                                                               
reiterated his emphasis of the conjunctive "or".                                                                                
9:02:13 AM                                                                                                                    
MS. MILES reiterated that two  or more groups don't usually share                                                               
fundraising events  very often.   She indicated that she  is fine                                                               
with the  language, particularly after hearing  the clarification                                                               
from   the  sponsor   that   there  is   no   intent  to   permit                                                               
group/candidate combinations  that would be problematic  with the                                                               
other provisions of law.                                                                                                        
9:03:29 AM                                                                                                                    
CHAIR SEATON,  after ascertaining that  there was no one  else to                                                               
testify, closed public testimony.                                                                                               
9:03:47 AM                                                                                                                    
CHAIR  SEATON encouraged  a  motion from  someone  to change  "48                                                               
hours" to  "72 hours", because  there exists a  72-hour timeframe                                                               
for candidates to reimburse themselves  and it seems [prudent] to                                                               
keep  the  times  the  same  to  avoid  "inadvertent  mix-ups  of                                                               
9:04:02 AM                                                                                                                    
REPRESENTATIVE GATTO moved Amendment 1, as follows:                                                                             
     On page 2, line 17:                                                                                                        
     Delete "within 48 hours"                                                                                                   
     Insert "within three working days"                                                                                         
9:04:24 AM                                                                                                                    
CHAIR SEATON objected for the purpose of discussion.                                                                            
9:04:45 AM                                                                                                                    
MS.  MILES,  in  response  to   a  question  from  Chair  Seaton,                                                               
confirmed  that the  amount  of  time [that  a  candidate has  to                                                               
reimburse his/her campaign]  is 72 hours.  She said  she does not                                                               
see a problem with using the phrase "within three working days".                                                                
9:05:06 AM                                                                                                                    
REPRESENTATIVE GATTO  explained that  "these things"  often occur                                                               
on a Friday  night, so this amendment would  allow the individual                                                               
"some opportunity besides the weekend."                                                                                         
9:05:26 AM                                                                                                                    
REPRESENTATIVE  HAWKER  said   as  long  as  he   has  the  tacit                                                               
concurrence from APOC that "within  three working days" would not                                                               
be a  problem, he would  be happy to defer  to the wisdom  of the                                                               
9:05:49 AM                                                                                                                    
CHAIR SEATON removed  his objection to Amendment 1.   There being                                                               
no further  objections, Amendment 1  was adopted.  He  added that                                                               
the amendment is conceptual.                                                                                                    
9:06:44 AM                                                                                                                    
REPRESENTATIVE GARDNER moved Amendment 2, as follows:                                                                           
     On page 2, line 17:                                                                                                        
     Delete "receives"                                                                                                      
     Insert "submits"                                                                                                           
     On page 2, line 19:                                                                                                        
     Between "on behalf of" and "candidate"                                                                                     
     Delete "another"                                                                                                           
     Insert "the"                                                                                                               
REPRESENTATIVE  GARDNER  said that  would  put  the onus  on  the                                                               
person that owes the money, not the one to whom it is owed.                                                                     
9:07:49 AM                                                                                                                    
CHAIR SEATON objected for the purpose of discussion.                                                                            
REPRESENTATIVE  GATTO said  hand  delivery,  postmark, and  check                                                               
date would probably be covered under "submit".                                                                                  
REPRESENTATIVE GARDNER said, as a  candidate, she doesn't want to                                                               
be responsible  for when someone  else repays her, only  for when                                                               
she repays him or her.                                                                                                          
9:08:08 AM                                                                                                                    
REPRESENTATIVE HAWKER stated opposition to  Amendment 2.  He said                                                               
it is  important to  be cautious when  making changes  within the                                                               
framework of  existing statute to  consider the  entire framework                                                               
in which the language is being constructed.                                                                                     
The committee took  an at-ease from 9:09:06 AM to  9:10:49 AM due                                                           
to technical difficulties.                                                                                                      
9:10:51 AM                                                                                                                    
REPRESENTATIVE HAWKER  restated for the record  his opposition to                                                               
Amendment  2.    He  explained  that when  changes  are  made  in                                                               
statute, a  consideration has to  be made that language  is being                                                               
added  within  the  overall  construct  of  the  larger  campaign                                                               
finance statutes.  He noted  that the "largest prefacing comment"                                                               
is  on  page  1,  line  5,   [in  Section  1,  which  amends]  AS                                                               
15.13.112(b), and which read:   "Campaign contributions held by a                                                               
candidate or  group may  not be".   Following that  is a  list of                                                               
things that the candidate may  not do with his/her contributions.                                                               
[Paragraph (7)]  - the  seventh prohibition in  the list  - shows                                                               
that  [those campaign  contributions] may  not be  "used to  make                                                               
contributions to  another candidate or  to a group".   He stated,                                                               
"This is  the provision that has  been interpreted to say  that I                                                               
cannot  make  a payment  on  behalf  of  a group  of  candidates,                                                               
because I would be contributing  value or benefit to that group."                                                               
Representative Hawker  said the  exemption that is  necessary, in                                                               
order to  be consistent  with the structure  of statute,  is that                                                               
the person  making that  payment is  the one who  is in  peril if                                                               
they make the payment in violation of statute.  He continued:                                                                   
     So,  we create  an  exemption that  protects the  payor                                                                    
     candidate from that peril, by  saying that they are not                                                                    
     held  in  violation of  [Paragraph]  (7)  here if  they                                                                    
     receive back  from the other candidate  ... the ratable                                                                    
     reimbursement.   And it's  important here,  because the                                                                    
     ...  candidate  who is  making  the  payment -  placing                                                                    
     themselves in peril - that  is a risk they are assuming                                                                    
     on themselves.   And ... if they, in fact,  do not have                                                                    
     ...  arrangements  made  with the  other  candidate  to                                                                    
     receive  that money  back, ...  they have  made ...  an                                                                    
     illegal contribution,  in that they are  the risk-taker                                                                    
     in this  piece.  ...  I believe  the onus should  be on                                                                    
     the  paying candidate,  not trying  to shift  this into                                                                    
     the other candidate paying.                                                                                                
REPRESENTATIVE HAWKER offered a hypothetical example.                                                                           
9:14:37 AM                                                                                                                    
CHAIR SEATON maintained his objection.                                                                                          
9:14:48 AM                                                                                                                    
REPRESENTATIVE GATTO responded as follows:                                                                                      
     I  guess where  I'm going  is:   I didn't  do it  in 72                                                                    
     hours  or  three  working  days ...,  and  now  I'm  in                                                                    
     violation.  So, I figure, "Well,  I can get out of this                                                                    
     if I simply go directly to  the vendor."  But the other                                                                    
     guy's already paid the vendor.   And now the vendor has                                                                    
     money from the  other guy and me; now he  has to make a                                                                    
     reimbursement to my  ... rich friend.   [Are] there any                                                                    
     violations?  Have I successfully  gotten out of trouble                                                                    
     by doing that?                                                                                                             
9:15:19 AM                                                                                                                    
REPRESENTATIVE HAWKER  responded that he  is not in  the position                                                               
to say how  APOC would rule on a specific  case.  Notwithstanding                                                               
that, he  surmised that in  that case  it would be  legitimate to                                                               
interpret  that the  wealthy candidate  in fact  overpaid his/her                                                               
portion to  the vendor and did  not make a loan,  because "it had                                                               
been paid by  the 'poor' candidate, who paid directly."   At that                                                               
point,  it would  be incumbent  upon the  rich candidate  who had                                                               
overpaid the vendor  to receive a reimbursement  from the vendor.                                                               
He added,  "I think the doctrine  of common sense would  apply in                                                               
the interpretation here."                                                                                                       
9:16:00 AM                                                                                                                    
REPRESENTATIVE GATTO clarified that  a person could delay his/her                                                               
reimbursement by  three months because  the vendor  is satisfied.                                                               
He queried,  "My rich friend  is simply willing to  leave himself                                                               
in that  hole of me  turning [up]  three months later  and paying                                                               
the vendor?"   Representative  Gatto commented,  "No, I  can't do                                                               
9:16:27 AM                                                                                                                    
CHAIR SEATON  clarified that "it has  to be not only  the amount,                                                               
but  it  has to  be  received,  otherwise  you  as the  ...  rich                                                               
candidate are in  violation."  He said [Amendment  2] would shift                                                               
the burden  to the poor  candidate whether or not  he/she submits                                                               
or not,  instead of saying that  the rich candidate "only  can do                                                               
this if they're going to  get reimbursed within the three working                                                               
9:16:56 AM                                                                                                                    
REPRESENTATIVE  GARDNER said  that's  the heart  of  what she  is                                                               
trying  to get  at, and  she reiterated  her previous  statements                                                               
about not being able to be in control of what someone else does.                                                                
9:17:13 AM                                                                                                                    
A roll  call vote was  taken.  Representatives Gardner  and Gatto                                                               
voted in favor  of Amendment 2.   Representatives Ramras, Elkins,                                                               
and Seaton voted against it.   Therefore, Amendment 2 failed by a                                                               
vote of 2-3.                                                                                                                    
9:18:41 AM                                                                                                                    
REPRESENTATIVE ELKINS  moved to report  [HB 183, as  amended] out                                                               
of   committee   with    individual   recommendations   and   the                                                               
accompanying  fiscal  notes.   There  being  no objections,  CSHB
183(STA) was  reported out  of the  House State  Affairs Standing                                                               
HB 170-PUB EMPLOYEES/TEACHERS RETIREMENT BOARDS                                                                               
9:19:39 AM                                                                                                                    
CHAIR SEATON announced that the  next order of business was HOUSE                                                               
BILL NO.  170, "An Act  relating to the qualifications  of public                                                               
members of the Public Employees'  Retirement Board and the Alaska                                                               
Teachers' Retirement Board."                                                                                                    
9:19:58 AM                                                                                                                    
HEATH HILYARD,  Staff to Representative Mike  Kelly, Alaska State                                                               
Legislature,   on  behalf   of  Representative   Kelly,  sponsor,                                                               
reviewed  the   previous  discussion  of  the   bill  from  prior                                                               
9:21:20 AM                                                                                                                    
PAT  WELLINGTON,  Elected  member, Public  Employees'  Retirement                                                               
(PERS)  Board  since  1977, commended  Representative  Kelly  for                                                               
realizing  that "probably  the  solution to  the  problem is  not                                                               
throwing out the two boards and  starting all over again."  In HB
170, the three public members  would be appointed by the governor                                                               
and two  would never have  worked for "a  participating political                                                               
subdivision."   He stated that he  is not certain of  the purpose                                                               
of that.   He said  right now the  governor has the  authority to                                                               
appoint three members  to the PERS Board.  He  listed the current                                                               
appointed  members.   He said  Representative Kelly  indicates in                                                               
the  proposed  bill  that  there  "should  be  a  need  for  some                                                               
expertise  in administration,  finance,  accounting, or  economic                                                               
development."   He opined  that it is  necessary to  consider the                                                               
responsibility of the  PERS Board, and to realize  that the board                                                               
is not in the asset management end of the program.                                                                              
9:23:54 AM                                                                                                                    
MR. WELLINGTON estimated  80 percent of the  board's work centers                                                               
around appeals  "from the  administrator."   He explained,  "If a                                                               
person is  injured on a job  and wants to apply  for occupational                                                               
or nonoccupational disability, and  the director turns them down,                                                               
the board hears those appeals with  two doctors."  The board also                                                               
hears  administrative  appeals   regarding  retirement  benefits,                                                               
overpayments, or underpayments.   The board meets once  a year to                                                               
set the  employers' contribution  rate, which  is brought  to the                                                               
board by the administration, with  the input it has received from                                                               
its actuarial  consultant - in  this case, Mercer  Human Resource                                                               
Consulting.     The  board  then  acts   upon  that  consolidated                                                               
contribution rate.   He  stated that he  has found  the actuarial                                                               
science interesting, and that information  is what the board must                                                               
rely  on.     He  said,   "That  is   about  the  only   area  of                                                               
responsibility in  the financial end  that we would have  any say                                                               
in."   He predicted the  experts that Representative  Kelly wants                                                               
on the  board would get bored  "sitting there listening to  a lot                                                               
of disability appeals."                                                                                                         
9:25:42 AM                                                                                                                    
MR. WELLINGTON said the board  also advises the administration on                                                               
health insurance  for retirees;  however, that program  is solely                                                               
the  responsibility of  the commissioner  of administration,  who                                                               
has the  sole authority  to make whatever  changes to  the health                                                               
insurance  he/she  feels appropriate.    He  recognized that  the                                                               
largest  current under  funding  is within  the health  insurance                                                               
component.    He  said  that   the  board  has  worked  with  the                                                               
administration over  the years  to attempt to  reduce costs.   He                                                               
said  there is  a health  insurance subcommittee  made up  of two                                                               
members  from PERS  and two  from  TRS, and  he has  sat on  that                                                               
subcommittee for the  last 10 years.  He noted  one of the money-                                                               
saving  ideas that  has been  instituted with  the administration                                                               
has been the  use of generic drugs and  "an educational process,"                                                               
which he indicated has resulted in  an annual savings of about $1                                                               
million.    He indicated  that  health  insurance may  rank  even                                                               
higher in importance than the paycheck to most retirees.                                                                        
9:27:49 AM                                                                                                                    
MR. WELLINGTON  concluded by reiterating that  it isn't necessary                                                               
to put  people on the  board with  expertise as [proposed  in the                                                               
bill], because "that's really not  the area that this board deals                                                               
9:28:21 AM                                                                                                                    
CHAIR  SEATON,  regarding  the  board  setting  the  contribution                                                               
rates, asked  Mr. Wellington if  he would find it  problematic if                                                               
the legislature  were to establish  a floor that the  board could                                                               
not drop below.                                                                                                                 
9:29:08 AM                                                                                                                    
MR. WELLINGTON answered no.  He  indicated that a number of years                                                               
ago the PERS board made  recommendations for a ceiling and floor.                                                               
He said the  [TRS board] doesn't "have that same  provision."  He                                                               
said he thinks  the ceiling is a good provision.   Mr. Wellington                                                               
said he  thinks there has  been some misconception that  the PERS                                                               
board  has  reduced  the  actuarial  rate  below  what  has  been                                                               
recommended by the consultant.   He emphasized that the board has                                                               
never  done that,  but has,  in fact,  set the  rate higher  than                                                               
recommended.   He explained,  "We were  trying to  maintain about                                                               
100-102 percent funding for PERS and,  had we adopted the rate as                                                               
recommended  by  the  administration  at Mercer,  we  would  have                                                               
dropped below  that.   And it  was a  collective decision  of the                                                               
board not to do that."                                                                                                          
9:30:26 AM                                                                                                                    
CHAIR  SEATON said  the committee  is not  familiar with  how the                                                               
board works,  and he indicated  that he appreciates  knowing that                                                               
90  percent  of  the  board's  time  is  involved  in  disability                                                               
9:30:39 AM                                                                                                                    
MR.   WELLINGTON   noted   that   the  board   also   does   some                                                               
administrative  appeals.   He offered  an  example.   He said  he                                                               
thinks that that  appellants who come before the  board feel that                                                               
they will get "a fair shake."                                                                                                   
9:31:31 AM                                                                                                                    
REPRESENTATIVE RAMRAS  recognized the  service of  Mr. Wellington                                                               
and of  the late Robert  Boko, "a spiritual, powerful  member who                                                               
left an extraordinary  mark on the ... TRS board."   He asked Mr.                                                               
Wellington to list the governors under which he has served.                                                                     
9:32:40 AM                                                                                                                    
MR. WELLINGTON  listed Governors:   Jay Hammond,  Bill Sheffield,                                                               
Steve Cowper, Walter Hickel, Tony Knowles, and Frank Murkowski.                                                                 
9:32:59 AM                                                                                                                    
REPRESENTATIVE RAMRAS  remarked that Mr. Wellington  has seen the                                                               
PERS fund living and breathing for many years.                                                                                  
9:33:35 AM                                                                                                                    
MR. WELLINGTON said comments are  made that "we probably couldn't                                                               
invest our way  out of the predicament that we're  in today," but                                                               
he said  he thinks it's important  to look at the  whole picture.                                                               
He said when  the board considered a hybrid program  in the past,                                                               
it was  basically told  to stay on  track.  He  said he  thinks a                                                               
better approach would  have been to look at the  whole system and                                                               
to  conduct  a study  to  consider  the  medical portion  of  the                                                               
program.   He said the  state's participation in the  SBS program                                                               
costs  about $40  million per  year, and  perhaps there  could be                                                               
some reduction  in that.   He mentioned near-term,  mid-term, and                                                               
long-term results, and  said he looks at  defined contribution as                                                               
a long-term [solution].   Mr. Wellington said, "I  think a better                                                               
approach  would  have   been  to  study  this,   look  at  what's                                                               
available, and then  recommend the changes."  He said  he did not                                                               
feel comfortable  in recommending a "title  only-type situation."                                                               
He said, as a former law  enforcement officer, he would not "sign                                                               
off"  on anything  he had  not had  the opportunity  to study  in                                                               
detail.   He admitted that  he may  be overcautious, but  said he                                                               
has seen those who are not  [cautious] get into trouble.  He said                                                               
he thinks  the board  would support  a change,  but not  until it                                                               
sees "what it would look like."                                                                                                 
9:37:08 AM                                                                                                                    
MR.  WELLINGTON, in  response to  a question  from Representative                                                               
Ramras, spoke of his former career  in law enforcement.  He noted                                                               
that he  also sits on  the Alaska State Pension  Investment Board                                                               
9:37:30 AM                                                                                                                    
REPRESENTATIVE RAMRAS asked  Mr. Wellington if the  PERS board is                                                               
looking out for the worker or the institution.                                                                                  
9:38:20 AM                                                                                                                    
MR. WELLINGTON responded that the  board looks out for the system                                                               
and the worker.   He said, "We're a finder  of facts, and develop                                                               
the  facts  as   presented.    We  do  take  in   ...  -  through                                                               
consideration - the evidence that  the worker brings forth to us,                                                               
but the bottom line is that  our decisions have to stand the test                                                               
of time,  because there is  an appeal  process."  He  noted that,                                                               
since  he's  been  on  the  board, [both]  the  state  [and]  the                                                               
appellant has had the right to  appeal to the superior court.  He                                                               
offered further  details.  He  said he knows  a lot of  people in                                                               
Alaska, but doesn't let that interfere with his work.                                                                           
9:39:40 AM                                                                                                                    
CHAIR  SEATON asked  Mr. Wellington  to describe  the differences                                                               
between the PERS and TRS Boards.                                                                                                
9:39:54 AM                                                                                                                    
MR.  WELLINGTON said  the TRS  Board includes  certified teachers                                                               
and  deals  only with  occupational  disability,  while the  PERS                                                               
Board   addresses   both    occupational   and   non-occupational                                                               
disability.   He said historically  there have been  two separate                                                               
boards, and their  constituency is a little different.   He noted                                                               
that the  TRS Board is not  as busy, because they  don't have the                                                               
same amount of appeals.  He  said the boards could be combined if                                                               
the  new  single board  was  made  bigger;  however, he  said  he                                                               
doesn't know that  "bigger is always better."   He indicated that                                                               
the current  boards function well and  "it doesn't cost a  lot to                                                               
9:41:20 AM                                                                                                                    
MR.  WELLINGTON, in  response to  a question  from Representative                                                               
Ramras,  noted that  the [PERS]  Board  meets 4-5  times a  year.                                                               
Appeals take  up a vast  majority of  the meeting.   The upcoming                                                               
meeting is  scheduled to last four  days.  He offered  an example                                                               
of a fireman working for the  municipality who fell off a ladder,                                                               
but  had preexisting  conditions  from a  football  injury.   The                                                               
board  decided that  falling off  the ladder  was not  sufficient                                                               
cause for disability, but the  court told the board to reconsider                                                               
the case under more liberal  interpretations, whereby the fireman                                                               
was given  the disability.  He  offered more examples.   He said,                                                               
"Every once in awhile the system has  to step up to the plate and                                                               
say, 'We made a mistake.'"                                                                                                      
9:44:39 AM                                                                                                                    
CHAIR SEATON offered  his understanding that every  member of the                                                               
current board has been employed at one time with PERS.                                                                          
9:44:49 AM                                                                                                                    
MR. WELLINGTON noted  that Bronk Jorgensen has never  been in the                                                               
system.  He said the  governor can appoint whomever he/she wants.                                                               
He said being  a board member is a time-consuming  job; for every                                                               
day spent  in hearings, hours  are spent at home  in preparation,                                                               
without compensation.                                                                                                           
9:45:48 AM                                                                                                                    
CHAIR SEATON  offered his understanding that  currently there are                                                               
no PERS employers represented [on  the board] from municipalities                                                               
or school districts.                                                                                                            
9:46:02 AM                                                                                                                    
MR. WELLINGTON said, "Not currently."                                                                                           
9:46:07 AM                                                                                                                    
CHAIR  SEATON  asked  Mr.  Wellington  if he  would  think  it  a                                                               
positive  move  toward  diversity  of  opinion  if  there  was  a                                                               
requirement  for "some  participation by  an employer  within ...                                                               
9:46:17 AM                                                                                                                    
MR.  WELLINGTON responded  that  he thinks  that  would be  good,                                                               
because people don't feel they have a voice at the table.                                                                       
CHAIR SEATON, in  response to a request  by Representative Ramras                                                               
and  the ensuing  remarks  by Mr.  Wellington,  suggested that  a                                                               
biography of each of the PERS  Board members could be provided to                                                               
the committee.                                                                                                                  
9:51:36 AM                                                                                                                    
JAY DULANY, testifying  on behalf of himself, noted that  he is a                                                               
member of  the Retired Public  Employees Association (RPEA).   He                                                               
stated  that it  would be  difficult  to improve  on the  current                                                               
makeup of  the boards, and  keeping those with experience  in the                                                               
system off the  boards would be unwise.  In  particular, he said,                                                               
removing the ability  to elect the two members on  the PERS board                                                               
"kind  of flies  in the  face of  our representative  democracy."                                                               
Furthermore, he  stated his belief  that the TRS board  should be                                                               
changed  to  allow two  elected  members.   Regarding  having  an                                                               
employer  on the  boards, he  said the  governor certainly  could                                                               
appoint  an employer;  however,  he doesn't  see  a problem  with                                                               
specifying that an employer be on the board.                                                                                    
9:53:09 AM                                                                                                                    
KEVIN RITCHIE, Alaska Municipal  League (AML), mentioned a recent                                                               
meeting that  had taken place.   He stated that about  63 percent                                                               
of PERS and  TRS systems are in schools,  municipalities, and the                                                               
university.    Currently,  he  noted,   there  is  no  structural                                                               
connection  between those  three to  the program,  so "this  is a                                                               
program which is  obviously key to employers."  He  said it would                                                               
certainly be reasonable to add seats.                                                                                           
9:55:09 AM                                                                                                                    
MR.  RITCHIE,  in  response  to  a  question  from  Chair  Seaton                                                               
regarding combining  the two  boards, said  AML has  been meeting                                                               
for about six months, and that  issue has not been addressed.  He                                                               
stated his personal  experience with "this board" is  that it has                                                               
a very open system.  For  example, he said several months ago AML                                                               
was invited to the table  to work through the Mercer information.                                                               
He concluded,  "I do agree  that the boards are  functioning very                                                               
openly [and] very well right now."                                                                                              
9:55:59 AM                                                                                                                    
SAM  TRIVETTE,  President,  Retired Public  Employees  of  Alaska                                                               
(RPEA), revealed  that his involvement  with RPEA began  in 1998.                                                               
He  said  RPEA  represents  thousands of  the  ten  thousands  of                                                               
retirees  from PERS,  TRS, and  other public  retirement systems,                                                               
and opposes  the proposed  legislation for  a number  of reasons.                                                               
He paraphrased his written testimony as follows:                                                                                
     For  all of  the public  members the  governor has  the                                                                    
     authority  to appoint,  this bill  would,  for no  good                                                                    
     reason, exclude  well over  50,000 Alaskans  from being                                                                    
     considered for  the positions,  just because  they have                                                                    
     at  some  time in  their  lives,  worked for  a  public                                                                    
     employer.    Furthermore,  the bill  excludes  numerous                                                                    
     other Alaskans  from appointment that  have significant                                                                    
     public  sector  experience  - but  not  private  sector                                                                    
     experience -  in administration,  financing, accounting                                                                    
     or economic development.                                                                                                   
     Not having seen a  [sponsor's] explanation of the bill,                                                                    
     it  is  unclear  to  me  what  the  purposes  of  these                                                                    
     sections  were.   Having attended  numerous PERS  & TRS                                                                    
     board meetings  in the last  5 years, ...  I understand                                                                    
     what  their duties  and responsibilities  are and  what                                                                    
     they spend  most of their time  on.  A majority  of the                                                                    
     [board's] time  is spent  hearing appeals  from members                                                                    
     of  the system.   The  board  members need  to be  very                                                                    
     familiar  with  Alaska  employee  and  retiree  laws  &                                                                    
     benefits, and how the system really works.                                                                                 
     Let me  say that  [in] my  observations of  current and                                                                    
     past PERS/TRS  Board members at  their meetings  in the                                                                    
     last half  decade, an observer  would not know  who was                                                                    
     elected,  who was  appointed, who  was a  former public                                                                    
     employee or not, based upon  their comments and actions                                                                    
     at the  meeting.  They  all understood  their statutory                                                                    
     and  fiduciary  responsibilities,  no matter  what  the                                                                    
     issue  was.   I  would  add  that the  members  without                                                                    
     public employee  experience tended  to lean  upon board                                                                    
     members with  the public employee experience  to effect                                                                    
     the  best  possible  outcome  for  the  state  and  any                                                                    
     individuals involved.                                                                                                      
     The  boards  have  a  history  of  fair  and  equitable                                                                    
     hearings.   Many potential  court appeals  are avoided,                                                                    
     as employees  and retirees are  more accepting  of even                                                                    
     adverse  decisions when  they  know  the board  members                                                                    
     understand the  system and the appellant  believes they                                                                    
     are getting reasonable consideration.                                                                                      
     Clearly,  having board  members with  public employment                                                                    
     experience  has enhanced  the ability  of the  state to                                                                    
     make  many changes  to the  retirement benefits  system                                                                    
     that  has  resulted  in many  millions  of  dollars  of                                                                    
     savings  in  recent  years.   Without  [the]  excellent                                                                    
     cooperation of  the current [Division of]  Retirement &                                                                    
     Benefits  staff   ...,  retired  PERS  and   TRS  board                                                                    
     members, and  RPEA volunteers, the fund  balances would                                                                    
     be in much worse shape today.                                                                                              
     ... I'm  assuming this  bill does  not tamper  with the                                                                    
     two ... elected ... PERS  Board members, and I think if                                                                    
     it  were  to  tamper  with  that  ...  you  would  find                                                                    
     yourself  in  a   potential  diminishment  of  benefits                                                                    
     situation,  which, if  that were  the  case, ...  would                                                                    
     certainly be subject to legal challenges.                                                                                  
     I've worked  with organizations for over  40 years ....                                                                    
     In  spite  of  individual  PERS and  TRS  Board  member                                                                    
     views, I've not  seen a group - even  with changes over                                                                    
     time  and many  new board  members of  the last  2-plus                                                                    
     years - that has better  served the interest of ... all                                                                    
     of the citizens  of Alaska.  They are  efficient - they                                                                    
     use their time  wisely; they are effective  - they find                                                                    
     ways to contain and reduce  costs; and the are beholden                                                                    
        to no one - including employers, retirees, [the                                                                         
     Division of] Retirement & Benefits, [and] consultants.                                                                     
10:01:18 AM                                                                                                                   
MR. TRIVETTE, regarding combining the  two boards, said he is not                                                               
an expert but has spent time  talking with TRS Board members.  He                                                               
pointed out that PERS and  TRS statutes were enacted at different                                                               
times and the boards have different  types of teachers.  In terms                                                               
of how  the money  is paid out  of the system,  TRS and  PERS are                                                               
quite different;  the average payment  for PERS  is approximately                                                               
$1,500, while  the average payment for  TRS is $2,500.   He noted                                                               
that many  of the  university employees  fall under  PERS, rather                                                               
than TRS.  He said he  doesn't want to tell the committee members                                                               
that it  would be impossible  to combine  the two boards,  but he                                                               
suggested they  withhold judgment and raise  those questions with                                                               
some of  the other PERS and  ... TRS board members  that would be                                                               
in town  next week.  He  also suggested that the  committee speak                                                               
with some  of the former members  of the PERS and  TRS boards; he                                                               
estimated there are  probably five or six members  that have been                                                               
replaced in  the last couple of  years.  Another person  of note,                                                               
he said, would be the board attorney,  who is not a member of the                                                               
board, but has been working with the board for many years.                                                                      
10:02:55 AM                                                                                                                   
CHAIR SEATON recognized that  Representative Mike Kelly, sponsor,                                                               
had   just  joined   the  committee.     After   discerning  that                                                               
Representative Kelly  did not  wish to  add further  testimony at                                                               
this time, he closed public testimony.                                                                                          
10:03:45 AM                                                                                                                   
CHAIR  SEATON announced  that the  House  State Affairs  Standing                                                               
Committee draft  for a  PERS/TRS bill should  be read  across the                                                               
House floor  today or  tomorrow.   He discussed  further calendar                                                               
There being no  further business before the  committee, the House                                                               
State  Affairs  Standing  Committee   meeting  was  adjourned  at                                                               
10:04:13 AM.                                                                                                                  

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