Legislature(2005 - 2006)CAPITOL 106

04/12/2005 08:00 AM STATE AFFAIRS


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08:04:47 AM Start
08:05:56 AM Human Rights Commission
08:28:44 AM HB215
08:44:31 AM HB238
09:43:52 AM SB87
10:09:17 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Confirmation hearing:State Commission TELECONFERENCED
for Human Rights
+= HB 238 PUBLIC EMPLOYEE/TEACHER RETIREMENT TELECONFERENCED
Heard & Held
+ HB 215 PERM FUND CORP. INVESTMENTS/REGULATIONS TELECONFERENCED
Moved Out of Committee
+= SB 87 SEAT BELT VIOLATION AS PRIMARY OFFENSE TELECONFERENCED
Moved HCS SB 87(STA) Out of Committee
+ HB 167 DEATH CERTIFICATE FOR DECEASED VETERAN TELECONFERENCED
Scheduled But Not Heard
+ HB 160 PUBLIC FUNDS & BALLOT PROPS/CANDIDATES TELECONFERENCED
Scheduled But Not Heard
Bills Previously Heard/Scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
             HOUSE STATE AFFAIRS STANDING COMMITTEE                                                                           
                         April 12, 2005                                                                                         
                           8:03 a.m.                                                                                          
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Paul Seaton, Chair                                                                                               
Representative Carl Gatto, Vice Chair                                                                                           
Representative Jim Elkins                                                                                                       
Representative Bob Lynn                                                                                                         
Representative Jay Ramras                                                                                                       
Representative Berta Gardner                                                                                                    
Representative Max Gruenberg                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
CONFIRMATION HEARING(S)                                                                                                         
                                                                                                                                
State Commission for Human Rights                                                                                             
                                                                                                                                
     M. Chris Hayes - Fairbanks                                                                                                 
     Lester Charles Lunceford - Whittier                                                                                        
     Barbara J. "Tamie" Miller - Wasilla                                                                                        
     Randall H. Eledge - Anchorage                                                                                              
                                                                                                                                
     - CONFIRMATION(S) ADVANCED                                                                                                 
                                                                                                                                
HOUSE BILL NO. 215                                                                                                              
"An  Act  relating  to the  investment  responsibilities  of  the                                                               
Alaska  Permanent  Fund   Corporation;  relating  to  regulations                                                               
proposed  and adopted  by the  Board  of Trustees  of the  Alaska                                                               
Permanent  Fund  Corporation  and providing  procedures  for  the                                                               
adoption  of  regulations by  the  board;  and providing  for  an                                                               
effective date."                                                                                                                
                                                                                                                                
     - MOVED HB 215 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 238                                                                                                              
"An Act relating to contribution  rates for employers and members                                                               
in the defined  benefit plans of the  teachers' retirement system                                                               
and the  public employees'  retirement system  and to  the ad-hoc                                                               
post-retirement  pension adjustment  in the  teachers' retirement                                                               
system;  requiring insurance  plans  provided to  members of  the                                                               
teachers' retirement system, the  judicial retirement system, the                                                               
public  employees'  retirement  system, and  the  former  elected                                                               
public  officials   retirement  system  to  provide   a  list  of                                                               
preferred  drugs;  relating  to defined  contribution  plans  for                                                               
members  of  the  teachers'  retirement  system  and  the  public                                                               
employees'  retirement system;  and  providing  for an  effective                                                               
date."                                                                                                                          
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
SENATE BILL NO. 87                                                                                                              
"An Act relating to motor vehicle safety belt violations."                                                                      
                                                                                                                                
     - MOVED HCS SB 87(STA) OUT OF COMMITTEE                                                                                    
                                                                                                                                
HOUSE BILL NO. 167                                                                                                              
"An Act relating to providing  a death certificate for a deceased                                                               
veteran without cost."                                                                                                          
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
HOUSE BILL NO. 160                                                                                                              
"An Act limiting the use of  money of the state and its political                                                               
subdivisions to affect an election."                                                                                            
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 215                                                                                                                  
SHORT TITLE: PERM FUND CORP. INVESTMENTS/REGULATIONS                                                                            
SPONSOR(s): REPRESENTATIVE(s) ROKEBERG BY REQUEST                                                                               
                                                                                                                                
03/09/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/09/05       (H)       STA, FIN                                                                                               
04/12/05       (H)       STA AT 8:00 AM CAPITOL 106                                                                             
                                                                                                                                
BILL: HB 238                                                                                                                  
SHORT TITLE: PUBLIC EMPLOYEE/TEACHER RETIREMENT                                                                                 
SPONSOR(s): STATE AFFAIRS                                                                                                       
                                                                                                                                
03/30/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/30/05       (H)       STA, FIN                                                                                               
03/31/05       (H)       STA AT 8:00 AM CAPITOL 106                                                                             
03/31/05       (H)       Heard & Held                                                                                           
03/31/05       (H)       MINUTE(STA)                                                                                            
04/02/05       (H)       STA AT 10:00 AM CAPITOL 106                                                                            
04/02/05       (H)       Heard & Held                                                                                           
04/02/05       (H)       MINUTE(STA)                                                                                            
04/05/05       (H)       STA AT 8:00 AM CAPITOL 106                                                                             
04/05/05       (H)       Heard & Held                                                                                           
04/05/05       (H)       MINUTE(STA)                                                                                            
04/07/05       (H)       STA AT 8:00 AM CAPITOL 106                                                                             
04/07/05       (H)       Scheduled But Not Heard                                                                                
04/09/05       (H)       STA AT 9:30 AM CAPITOL 106                                                                             
04/09/05       (H)       Heard & Held                                                                                           
04/09/05       (H)       MINUTE(STA)                                                                                            
04/12/05       (H)       STA AT 8:00 AM CAPITOL 106                                                                             
                                                                                                                                
BILL: SB  87                                                                                                                  
SHORT TITLE: SEAT BELT VIOLATION AS PRIMARY OFFENSE                                                                             
SPONSOR(s): SENATOR(s) BUNDE                                                                                                    
                                                                                                                                
02/02/05       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/02/05       (S)       STA, JUD                                                                                               
02/17/05       (S)       STA AT 3:30 PM BELTZ 211                                                                               
02/17/05       (S)       Moved  SB  87 Out of Committee                                                                         
02/17/05       (S)       MINUTE(STA)                                                                                            
02/18/05       (S)       STA RPT  2DP 2NR                                                                                       
02/18/05       (S)       NR: THERRIAULT, HUGGINS                                                                                
02/18/05       (S)       DP: ELTON, WAGONER                                                                                     
03/01/05       (S)       JUD AT 8:30 AM BUTROVICH 205                                                                           
03/01/05       (S)       Moved SB  87 Out of Committee                                                                          
03/01/05       (S)       MINUTE(JUD)                                                                                            
03/02/05       (S)       JUD RPT 3DP 2NR                                                                                        
03/02/05       (S)       DP: SEEKINS, FRENCH, GUESS                                                                             
03/02/05       (S)       NR: THERRIAULT, HUGGINS                                                                                
03/03/05       (S)       TRANSMITTED TO (H)                                                                                     
03/03/05       (S)       VERSION: SB  87                                                                                        
03/04/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/04/05       (H)       STA, JUD                                                                                               
03/19/05       (H)       STA AT 9:30 AM CAPITOL 106                                                                             
03/19/05       (H)       Heard & Held                                                                                           
03/19/05       (H)       MINUTE(STA)                                                                                            
04/12/05       (H)       STA AT 8:00 AM CAPITOL 106                                                                             
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
M. CHRIS HAYES                                                                                                                  
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified as appointee to the Human Rights                                                                 
Commission.                                                                                                                     
                                                                                                                                
LESTER CHARLES LUNCEFORD                                                                                                        
Whittier, Alaska                                                                                                                
POSITION STATEMENT:   Testified as appointee to  the Human Rights                                                               
Commission.                                                                                                                     
                                                                                                                                
BARBARA J. "TAMIE" MILLER                                                                                                       
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT:   Testified as appointee to  the Human Rights                                                               
Commission.                                                                                                                     
                                                                                                                                
RANDALL H. ELEDGE                                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Testified as appointee to  the Human Rights                                                               
Commission.                                                                                                                     
                                                                                                                                
MICHAEL J. BURNS, Executive Director                                                                                            
Alaska Permanent Fund Corporation                                                                                               
Department of Revenue                                                                                                           
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:     Presented  HB  215  on   behalf  of  the                                                               
department.                                                                                                                     
                                                                                                                                
LAURA ACHEE, Research and Communications Liaison                                                                                
Alaska Permanent Fund Corporation                                                                                               
Department of Revenue                                                                                                           
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:    Answered   questions  on  behalf  of  the                                                               
department during the hearing of HB 215.                                                                                        
                                                                                                                                
KATHERINE SHOWS, Staff                                                                                                          
to Representative Paul Seaton                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Provided  clarification during  the hearing                                                               
on HB 238, on behalf of Representative Seaton, sponsor.                                                                         
                                                                                                                              
MR. BRAD LAWSON                                                                                                                 
Mercer Human Resource Consulting                                                                                                
Seattle, Washington                                                                                                             
POSITION  STATEMENT:   Reviewed the  projected values  for health                                                               
reimbursement  accounts prepared  by Mercer  Resource Consulting,                                                               
on behalf  of the Division  of Retirement & Benefits,  during the                                                               
hearing on HB 238.                                                                                                              
                                                                                                                                
MELANIE MILLHORN, Director                                                                                                      
Health Benefits Section                                                                                                         
Division of Retirement & Benefits                                                                                               
Department of Administration                                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Offered  closing remarks  on behalf  of the                                                               
division during the hearing on HB 238.                                                                                          
                                                                                                                                
SENATOR CON BUNDE                                                                                                               
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified as sponsor of SB 87.                                                                             
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR  PAUL  SEATON  called  the  House  State  Affairs  Standing                                                             
Committee meeting to  order at 8:03 a.m.   Representatives Gatto,                                                               
Elkins,  Lynn, and  Seaton were  present  at the  call to  order.                                                               
Representatives  Ramras, Gardner,  and Gruenberg  arrived as  the                                                               
meeting was in progress.                                                                                                        
                                                                                                                                
^CONFIRMATION HEARING(S)                                                                                                        
                                                                                                                                
^Human Rights Commission                                                                                                    
                                                                                                                                
CHAIR  SEATON   announced  the  first  order   of  business,  the                                                               
confirmation  hearings   for  appointees  to  the   Human  Rights                                                               
Commission.                                                                                                                     
                                                                                                                                
8:04:47 AM                                                                                                                    
                                                                                                                                
[Due  to  technical  difficulties,  the  portion  of  Ms.  Hayes'                                                               
testimony from  8:04:22 to 8:05:40  has been taken from  Gavel to                                                               
Gavel.]                                                                                                                         
                                                                                                                                
M. CHRIS HAYES - Fairbanks, Alaska                                                                                            
                                                                                                                                
M. CHRIS  HAYES, appointee to  the Human Rights  Commission, told                                                               
the committee  that she has  lived in Alaska virtually  her whole                                                               
life and  loves the  state.   She said she  wants to  ensure that                                                               
people  are guaranteed  human rights  and  are not  discriminated                                                               
against.  She  said many cities have established  their own human                                                               
rights commissions  that work in  concert with the  state's Human                                                               
Rights Commission.   Ms. Hayes  stated her belief that  she would                                                               
offer a  needed perspective to  the commission, because she  is a                                                               
fair-minded person.                                                                                                             
                                                                                                                                
8:05:56 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON  noted that  Ms. Hayes  is a  current member  of the                                                               
U.S. Commission on Civil Rights.                                                                                                
                                                                                                                                
8:06:04 AM                                                                                                                    
                                                                                                                                
MS. HAYES said  she is a member of the  "area regional council of                                                               
the  area regional  committee."   She said  the group  meets only                                                               
about  twice a  year, but  is active  when funding  is available.                                                               
She listed some of the issues that the group addressed.                                                                         
                                                                                                                                
8:07:07 AM                                                                                                                    
                                                                                                                                
MS. HAYES, in  response to a question  from Representative Gatto,                                                               
said "COGIC"  - an  acronym written  on her  resume -  stands for                                                               
Church of  God in Christ.   She offered details  regarding COGIC,                                                               
including that  its members believe  that everyone has  the right                                                               
to believe what they want.                                                                                                      
                                                                                                                                
8:07:41 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LYNN noted  that  Ms. Hayes  had  said the  civil                                                               
rights group  dealt with the  issue of  exit exams, and  he asked                                                               
her how that relates to civil rights.                                                                                           
                                                                                                                                
8:07:59 AM                                                                                                                    
                                                                                                                                
MS.  HAYES replied  that it's  an issue  of discrimination.   She                                                               
explained, "It's  not so much  the exam, but the  consequences of                                                               
not passing it."                                                                                                                
                                                                                                                                
8:08:46 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO asked, "Is  it discrimination if everyone is                                                               
subject to the same rules?"                                                                                                     
                                                                                                                                
8:09:01 AM                                                                                                                    
                                                                                                                                
MS.  HAYES answered,  "If it's  the  law and  the rule?   No,  it                                                               
wouldn't  be  discrimination unless  it  goes  against the  basic                                                               
human rights."   She said there  have been laws in  the past that                                                               
have been  discriminatory in nature.   She said issues  are dealt                                                               
with  on  a case-by-case  basis.    In  response to  a  follow-up                                                               
question  from  Representative  Gatto,  she  explained  that  the                                                               
previously  mentioned exit  exam  was questioned  by some  Native                                                               
Alaskan  groups  who felt  that  the  resources for  learning  in                                                               
preparation for the test were not being made available.                                                                         
                                                                                                                                
8:10:45 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER  moved to  forward the confirmation  of M.                                                               
Chris Hayes  [to the joint  session of  the House and  Senate for                                                               
confirmation].   There being no  objection, the  confirmation was                                                               
advanced from the House State Affairs Standing Committee.                                                                       
                                                                                                                                
LESTER CHARLES LUNCEFORD - Whittier, Alaska                                                                                   
                                                                                                                                
8:11:41 AM                                                                                                                    
                                                                                                                                
LESTER  CHARLES   LUNCEFORD,  appointee   to  the   Human  Rights                                                               
Commission, said  he has served  two years on the  commission and                                                               
has  been reappointed  by the  governor for  a second  term.   He                                                               
reviewed that  his background  has been that  of a  career police                                                               
officer.   He  was the  former chief  of police  for the  City of                                                               
Whittier  and is  currently  the  mayor for  that  city, but  his                                                               
paying job  is as a real  estate manager for the  Alaska Railroad                                                               
Corporation.  He  stated that he has a wide  variety of interests                                                               
and experience  and thinks his  law enforcement  background would                                                               
be useful on  the commission.  He entertained  questions from the                                                               
committee.                                                                                                                      
                                                                                                                                
8:13:34 AM                                                                                                                    
                                                                                                                                
MR.  LUNCEFORD, in  response to  a  question from  Representative                                                               
Gatto,  listed the  top  three discriminatory  acts  as:   sexual                                                               
[harassment], age discrimination, and race discrimination.                                                                      
                                                                                                                                
8:14:18 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARDNER  moved  to forward  the  confirmation  of                                                               
Lester Charles  Lunceford to the  joint session of the  House and                                                               
Senate  for   confirmation.    There  being   no  objection,  the                                                               
confirmation was  advanced from the House  State Affairs Standing                                                               
Committee.                                                                                                                      
                                                                                                                                
BARBARA J. "TAMIE" MILLER  - Wasilla, Alaska                                                                                  
                                                                                                                                
8:14:45 AM                                                                                                                    
                                                                                                                                
BARBARA  J.  "TAMIE"  MILLER,  appointee   to  the  Human  Rights                                                               
Commission, told  the committee that  she has been a  resident of                                                               
Alaska for  44 years.   She said she  is a retired  teacher whose                                                               
work  in the  classroom afforded  her the  opportunity to  ensure                                                               
that all her students were treated  equally.  Ms. Miller said she                                                               
looks  for ways  to  enhance her  community.   In  response to  a                                                               
question  from Chair  Seaton,  she said  she  has not  previously                                                               
served on the  commission, but served on  [the National Education                                                               
Association, Alaska  branch (NEA-Alaska)]  for 18  years -  12 of                                                               
those years as its president.                                                                                                   
                                                                                                                                
8:16:25 AM                                                                                                                    
                                                                                                                                
CHAIR  SEATON  noted  that  Ms.   Miller's  application  form  is                                                               
included in the committee packet.                                                                                               
                                                                                                                                
8:16:54 AM                                                                                                                    
                                                                                                                                
MS.  MILLER,  in  response  to  a  question  from  Representative                                                               
Gardner  regarding Ms.  Miller's  NRECA certification,  explained                                                               
that  NRECA  stands  for  "National  Rural  Electric  Cooperative                                                               
Association."                                                                                                                   
                                                                                                                                
8:17:13 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  asked Ms. Miller  if she or  anyone she                                                               
knows has  ever been  party to an  adjudication before  the Human                                                               
Rights  Commission or  any other  local  human rights  commission                                                               
because of a discrimination issue.                                                                                              
                                                                                                                                
8:17:40 AM                                                                                                                    
                                                                                                                                
MS. MILLER responded that she  doesn't believe so.  She explained                                                               
that if there were any issues  during her time serving with [NEA-                                                               
Alaska], they were probably handled by staff.                                                                                   
                                                                                                                                
8:17:48 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARDNER   asked  Ms.   Miller  if  she   has  any                                                               
experience directly related to civil rights.                                                                                    
                                                                                                                                
8:18:02 AM                                                                                                                    
                                                                                                                                
MS. MILLER reiterated that, as  a teacher, she practiced her firm                                                               
belief that every student deserves to be treated equally.                                                                       
                                                                                                                                
8:18:30 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON  remarked that  it's nice to  see such  diversity of                                                               
candidates, because that's  probably what is needed  on the Human                                                               
Rights Commission.                                                                                                              
                                                                                                                                
8:19:06 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARDNER  moved  to forward  the  confirmation  of                                                               
Barbara J. "Tamie"  Miller to the joint session of  the House and                                                               
Senate  for   confirmation.    There  being   no  objection,  the                                                               
confirmation was  advanced from the House  State Affairs Standing                                                               
Committee.                                                                                                                      
                                                                                                                                
RANDALL H. ELEDGE - Anchorage, Alaska                                                                                         
                                                                                                                                
8:19:35 AM                                                                                                                    
                                                                                                                                
RANDALL  H. ELEDGE,  appointee to  the  Human Rights  Commission,                                                               
noted that he is a 23-year  resident of Alaska who will bring his                                                               
business experience to  the commission.  He  expressed his desire                                                               
to serve  on the commission  to "give back  to the state  some of                                                               
what it's given to me and my family."                                                                                           
                                                                                                                                
8:20:33 AM                                                                                                                    
                                                                                                                                
CHAIR  SEATON noted  that  Mr. Eledge  had sat  on  the board  of                                                               
directors for the Susitna Girl Scouts.                                                                                          
                                                                                                                                
8:20:38 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG   reiterated  his   question  regarding                                                               
experience  with discrimination  issues before  the Human  Rights                                                               
Commission or any other related commission.                                                                                     
                                                                                                                                
8:21:07 AM                                                                                                                    
                                                                                                                                
MR.  ELEDGE  said  he  remembers some  names  that  were  brought                                                               
forward, but they  were not personal acquaintances.   In response                                                               
to further  questions from  Representative Gruenberg,  he offered                                                               
definitions for some of the acronyms found in his resume.                                                                       
                                                                                                                                
8:22:12 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARDNER  moved  to forward  the  confirmation  of                                                               
Randall H.  Eledge to the joint  session of the House  and Senate                                                               
for  confirmation.   There being  no objection,  the confirmation                                                               
was advanced from the House State Affairs Standing Committee.                                                                   
                                                                                                                                
The committee took an at-ease from 8:23:10 AM to 8:24:38 AM.                                                                
                                                                                                                                
8:25:01 AM                                                                                                                    
                                                                                                                                
CHAIR  SEATON discussed  the schedule  for the  remainder of  the                                                               
meeting.                                                                                                                        
                                                                                                                                
The committee took an at-ease from 8:25:44 AM to 8:27:44 AM.                                                                
                                                                                                                                
HB 215-PERM FUND CORP. INVESTMENTS/REGULATIONS                                                                              
                                                                                                                                
CHAIR SEATON announced that the  next order of business was HOUSE                                                               
BILL   NO.   215,   "An   Act    relating   to   the   investment                                                               
responsibilities  of  the   Alaska  Permanent  Fund  Corporation;                                                               
relating  to regulations  proposed and  adopted by  the Board  of                                                               
Trustees of  the Alaska Permanent Fund  Corporation and providing                                                               
procedures  for the  adoption of  regulations by  the board;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
8:28:44 AM                                                                                                                    
                                                                                                                                
MICHAEL  J.  BURNS,  Executive Director,  Alaska  Permanent  Fund                                                               
Corporation, Department  of Revenue,  presented HB 215  on behalf                                                               
of the  department.  He  said the  bill would change  the [legal]                                                               
list of permissible investments  for the permanent fund currently                                                               
found in statute  to "the prudent-investor rule."   He noted that                                                               
currently,  45  of  the  50   states'  pension  funds,  including                                                               
Alaska's,  use the  [prudent-investor]  rule.   He said  Alaska's                                                               
Public   Employees'  Retirement   System  (PERS)   and  Teachers'                                                               
Retirement System (TRS) have no  statutory guideline, but use the                                                               
[prudent-investor] rule.   He said  when the fund  was originally                                                               
created, it was 100 percent in  fixed income, which made sense at                                                               
the time.  Over time,  investments have been liberalized, and the                                                               
fund's performance  has reacted  positively to  that.   Today, he                                                               
emphasized,  the statutory  list is  actually impeding  progress,                                                               
"causing us to take higher risks for lower returns."                                                                            
                                                                                                                                
MR. BURNS  directed attention  to page  4 of  a handout  from the                                                               
Alaska Permanent  Fund, included  in the committee  packet, which                                                               
is entitled, "Reducing Risk, Increasing Return."   On page 4 is a                                                               
graph  called, "Efficient  Frontier."   He noted  that the  lower                                                               
blue line shows the expected  returns of various asset mixes, and                                                               
the blue square shows "were we  are today."  He added that that's                                                               
where the trustees made their  asset allocation, in [March 2004].                                                               
He explained  that the vertical  axis shows  "expected historical                                                               
returns" and  the horizontal axis  shows "increase in  risk" from                                                               
left to right.  He continued as follows:                                                                                        
                                                                                                                                
        So, if you go directly above the blue box to the                                                                        
      purple box [showing standard deviation], that's the                                                                       
     efficient frontier  without a  statutory list;  that is                                                                    
     the  return that  we could  get today  for exactly  the                                                                    
     same risk  we are taking.   Or conversely, if  you look                                                                    
     to  the  left  at   the  green  box  [showing  expected                                                                    
     return],  we could  get the  same return  we're getting                                                                    
     today for that much less  risk.  So, the statutory list                                                                    
     is putting  us in a  position where we are  taking more                                                                    
     risk for less return.                                                                                                      
                                                                                                                                
8:32:30 AM                                                                                                                    
                                                                                                                                
MR.  BURNS,  in  response  to   a  question  from  Representative                                                               
Gardner, explained that  the numbers 1-10 along the  blue and red                                                               
lines stand  for different  asset mixes  that the  trustees would                                                               
look at.   He added, "We landed on number  8, and that's probably                                                               
55 percent  equities [and] ...  35 percent bonds."   He indicated                                                               
that he was  also referring to page  5 of the handout.   He said,                                                               
"That's how  the efficient frontier  is - the different  mixes of                                                               
assets are  those points along  there, and we've  highlighted the                                                               
square one,  because that's the  one we  decided on a  year ago."                                                               
He  added, "Those  are driven  by the  historical returns  of the                                                               
various asset categories."                                                                                                      
                                                                                                                                
8:33:26 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARDNER responded  that  she didn't  see "on  the                                                               
chart where 8 is."  She indicated  that what she could not see is                                                               
what is corresponding to the current target or goal.                                                                            
                                                                                                                                
8:33:36 AM                                                                                                                    
                                                                                                                                
LAURA   ACHEE,  Research   and  Communications   Liaison,  Alaska                                                               
Permanent Fund  Corporation, Department  of Revenue,  in response                                                               
to a question from Representative Gardner, explained:                                                                           
                                                                                                                                
     We don't have  all of the possible  portfolios; so, the                                                                    
     triangles that  you're looking at  that are  numbered -                                                                    
     we don't  have those in your  packet.  What we  do have                                                                    
     are the main points - the  blue box, the green box, the                                                                    
     brown box,  the purple box -  and those are on  page 5.                                                                    
     And,  unfortunately,  they're  not labeled  so  clearly                                                                    
     that you can  immediately spot them, but  they match up                                                                    
     in color.  ... For  instance, the brown box is labeled,                                                                    
     "expected return  equals 8.5  percent," and so,  if you                                                                    
     look  on page  5,  there's a  column  [with a  matching                                                                    
     title]  ...,   and  ...  that   shows  you   the  asset                                                                    
     allocation that corresponds to that point.                                                                                 
                                                                                                                                
8:34:23 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON said what is being  considered in HB 215 is changing                                                               
the  philosophy from  having the  legislature dictating  what the                                                               
basket of  investments will be to  requiring the prudent-investor                                                               
rule to be used for the management of the permanent fund.                                                                       
                                                                                                                                
8:34:46 AM                                                                                                                    
                                                                                                                                
MR. BURNS, in  response to a question  from Representative Gatto,                                                               
said  there is  an  existing definition  of the  prudent-investor                                                               
rule.                                                                                                                           
                                                                                                                                
8:34:59 AM                                                                                                                    
                                                                                                                                
MS. ACHEE  said the idea  of the  "prudent man rule"  has existed                                                               
for a  long time,  and the prudent-investor  rule was  defined in                                                               
the early 90s.                                                                                                                  
                                                                                                                                
8:35:33 AM                                                                                                                    
                                                                                                                                
MR. BURNS pointed  out that one of the important  concepts of the                                                               
prudent-investor rule  is that "you  don't have to be  right, but                                                               
you have to ... document ...  your thought process ...."  He said                                                               
he thinks  that's what the  board meetings are about,  and that's                                                               
why there  are investors and advisors.   He stated, "The  fund is                                                               
governed today by the prudent-investor  rule and further governed                                                               
by  the  statutory limitations;  so,  we  do operate  as  prudent                                                               
investors today."                                                                                                               
                                                                                                                                
8:36:04 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GATTO   gave  opposite   examples  of   what  two                                                               
different investors  may call "prudent."   He asked,  "Isn't that                                                               
kind of a self concept?"                                                                                                        
                                                                                                                                
8:36:32 AM                                                                                                                    
                                                                                                                                
MR. BURNS  replied that both  of Representative  Gatto's examples                                                               
would  defy  [the  term]  prudent  investor,  because  they  lack                                                               
diversity,  which is  necessary.   He stated,  "A very  important                                                               
thing  today  is  lack  of   correlation."    He  explained  that                                                               
portfolios were  previously constructed  whereby a great  deal of                                                               
thought  was  given   to  each  particular  asset.     Today,  he                                                               
continued, the  same thought is given  to the asset, but  also to                                                               
how  it interacts  within  the  whole portfolio.    He said  it's                                                               
important  to  have  things  that  don't  correlate,  but  rather                                                               
respond  to  different  things.    He  added,  "A  lot  of  those                                                               
[uncorrelated]  assets that  we're talking  about are  really not                                                               
available to  us today, and  that's, I  think, one of  the things                                                               
that's impeding our performance, or holding us back."                                                                           
                                                                                                                                
8:37:39 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS  asked if  it  would  follow the  prudent-                                                               
investor rule  to borrow money  on $400 million at  standard bond                                                               
rates and  then pay  it back  with permanent  fund earnings.   He                                                               
said, "I'm thinking about the  Amerada Hess [Corporation]-type of                                                               
approach that the  House is contemplating.  Does  that follow the                                                               
prudent-investor rule?"                                                                                                         
                                                                                                                                
8:38:43 AM                                                                                                                    
                                                                                                                                
MR. BURNS responded as follows:                                                                                                 
                                                                                                                                
     We would  actually not  be making  that investment.   I                                                                    
     think  from just  the financial  mathematics, any  time                                                                    
     you can  borrow tax exempt  and invest taxable  ..., or                                                                    
     use it in  a taxable fashion, I think that  makes ... a                                                                    
     great deal of sense.   The Amerada Hess [Corporation] -                                                                    
     that's not a decision that  the trustees would make, so                                                                    
     it  doesn't  fall  under the  prudent-investor  [rule];                                                                    
     that's not an investment that  they would be making, or                                                                    
     the  leverage is  a  decision that  they  would not  be                                                                    
     making ....  They would  continue to invest the Amerada                                                                    
     Hess [Corporation]  dollars just  as they did  the rest                                                                    
     of the fund.                                                                                                               
                                                                                                                                
8:39:58 AM                                                                                                                    
                                                                                                                                
CHAIR   SEATON,   in   response    to   further   comments   from                                                               
Representative Ramras,  asked that  the discussion be  focused on                                                               
the issue at hand.                                                                                                              
                                                                                                                                
8:40:23 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER asked Mr. Burns  if he knows of anyone who                                                               
is or may be opposed to the change proposed in HB 215.                                                                          
                                                                                                                                
8:40:33 AM                                                                                                                    
                                                                                                                                
MR.  BURNS   said  the  permanent  fund   has  historically  been                                                               
supported in  changes to its  asset mix  by the legislature.   He                                                               
said the  only reluctance he has  heard from some people  is that                                                               
perhaps this  [change] should  be taken  more incrementally.   He                                                               
said, "I  think with the asset  types that we're talking  about -                                                               
that doesn't really work."  He offered an example as follows:                                                                   
                                                                                                                                
     We have a commitment today  under the basket clause of,                                                                    
     I believe, $600  million to private equity.   We have a                                                                    
     commitment today  of ... about $240  million to private                                                                    
     equity of  that commitment  of $600 million.   Actually                                                                    
     outstanding,  that  people  have drawn  down,  is  $2.6                                                                    
     million.  So,  there's a real execution  risk in trying                                                                    
     to   incrementally  do   this  in   a  process   that's                                                                    
     incremental already  ....  We're  looking at -  today -                                                                    
     our commitment  to private equity.   And to get  to the                                                                    
     point where we want to be,  we need to commit more than                                                                    
     we want to get to, just  because it takes so long.  And                                                                    
     some of  them, you have  returns starting to  come back                                                                    
     before the money is actually  drawn down.  So, you need                                                                    
     to commit beyond what you  want.  If you have statutory                                                                    
     limitation, that's a real problem.                                                                                         
                                                                                                                                
MR. BURNS offered  an example regarding the  University of Alaska                                                               
foundation.                                                                                                                     
                                                                                                                                
8:42:54 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ELKINS  moved to  report HB  215 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.  There being no objection,  HB 215 was reported out of the                                                               
House State Affairs Standing Committee.                                                                                         
                                                                                                                                
HB 238-PUBLIC EMPLOYEE/TEACHER RETIREMENT                                                                                   
                                                                                                                                
8:44:31 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON announced that the  next order of business was HOUSE                                                               
BILL  NO.  238,  "An  Act  relating  to  contribution  rates  for                                                               
employers  and  members  in  the defined  benefit  plans  of  the                                                               
teachers' retirement system and  the public employees' retirement                                                               
system and  to the ad-hoc  post-retirement pension  adjustment in                                                               
the  teachers'  retirement   system;  requiring  insurance  plans                                                               
provided  to  members of  the  teachers'  retirement system,  the                                                               
judicial  retirement  system,  the public  employees'  retirement                                                               
system,  and  the  former  elected  public  officials  retirement                                                               
system to provide a list  of preferred drugs; relating to defined                                                               
contribution  plans  for  members  of  the  teachers'  retirement                                                               
system  and   the  public   employees'  retirement   system;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
[Before the  committee as a  work draft was  committee substitute                                                               
(CS) for HB 238, Version 24-LS0761\L, Craver, 4/8/05.]                                                                          
                                                                                                                                
8:44:42 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON directed attention to  a series of 15 tables showing                                                               
the "Projected  Values for Health Reimbursement  Accounts," which                                                               
were added to  the committee packet to replace  an inaccurate set                                                               
of tables previously in the packet.                                                                                             
                                                                                                                                
8:46:18 AM                                                                                                                    
                                                                                                                                
KATHERINE  SHOWS, Staff  to  Representative  Paul Seaton,  Alaska                                                               
State Legislature,  on behalf of Representative  Seaton, sponsor,                                                               
reminded  the   committee  that   the  retirement  for   all  the                                                               
categories about to be discussed is set at 30 years in HB 238.                                                                  
                                                                                                                                
8:46:38 AM                                                                                                                    
                                                                                                                                
MR. BRAD  LAWSON, Mercer Human Resource  Consulting, referring to                                                               
the 15 tables, reviewed the  contents page, which lists the types                                                               
of accounts, and read as follows:                                                                                               
                                                                                                                                
     1.   PERS "other" early hire - 1% HRA                                                                                      
     2.   PERS "other" early hire - 2% HRA                                                                                      
     3.   PERS "other" late hire - 1% HRA                                                                                       
     4.  PERS "other" late hire - 2% HRA                                                                                        
     5.   PERS "other" with spouse late hire - 2% HRA                                                                           
     6.   PERS police/fire early hire - 1% HRA                                                                                  
     7.   PERS police/fire early hire - 2% HRA                                                                                  
     8.   PERS police/fire late hire - 1% HRA                                                                                   
     9.   PERS police/fire late hire - 2% HRA                                                                                   
     10. PERS police/fire with spouse late hire - 2% HRA                                                                        
     11. TRS early hire - 1% HRA                                                                                                
     12. TRS early hire - 2% HRA                                                                                                
     13. TRS late hire - 1% HRA                                                                                                 
     14. TRS late hire - 2% HRA                                                                                                 
     15. TRS late hire with spouse - 2% HRA                                                                                     
                                                                                                                                
8:47:34 AM                                                                                                                    
                                                                                                                                
CHAIR  SEATON noted  that  the upper-left  corner  of each  chart                                                               
shows the assumptions.                                                                                                          
                                                                                                                                
8:48:44 AM                                                                                                                    
                                                                                                                                
MR. LAWSON selected the first chart to review the assumptions.                                                                  
                                                                                                                                
8:52:00 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER  asked why the subsidy  base is calculated                                                               
from 2003, when the hire date is 2005.                                                                                          
                                                                                                                                
8:52:20 AM                                                                                                                    
                                                                                                                                
MR. LAWSON explained as follows:                                                                                                
                                                                                                                                
     We  have the  premium rate,  from which  we subtract  a                                                                    
     subsidy  base that's  established  by the  legislature,                                                                    
     and  we arrive  then at  a retiree  contribution.   ...                                                                    
     The subsidy  base that we  established at  7/1/2003 was                                                                    
     equivalent to  the claims cost.   Each retiree  then is                                                                    
     entitled  to a  portion  of that  subsidy base  towards                                                                    
     their  health care  cost.   ...   So, the  subsidy base                                                                    
     multiplied by  the percentage determines the  amount of                                                                    
     dollars  that will  go  towards  that retiree's  health                                                                    
     care cost, ...  with the retiree making  up the balance                                                                    
     of the premium.                                                                                                            
                                                                                                                                
8:54:54 AM                                                                                                                    
                                                                                                                                
MR. LAWSON,  in response to  Chair Seaton, said the  subsidy base                                                               
represents  the  known  or fixed  responsibility  of  the  system                                                               
toward the health care coverage.                                                                                                
                                                                                                                                
8:55:04 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON  said this  is the point,  during discussion  of the                                                               
bill  on a  previous  day, when  the committee  had  to remove  a                                                               
section regarding  a 5 percent  limit on premiums, because  it is                                                               
not  feasible to  set  that limit  with  fluctuating health  care                                                               
costs  and service.    He indicated  the result  is  that "the  5                                                               
percent is limiting  the amount of escalation that  the system is                                                               
paying over time."                                                                                                              
                                                                                                                                
8:55:39 AM                                                                                                                    
                                                                                                                                
MR.  LAWSON answered  that's correct.   He  added, "And  with the                                                               
retiree making up that remaining portion."                                                                                      
                                                                                                                                
8:55:50 AM                                                                                                                    
                                                                                                                                
MR. LAWSON  continued with the  first chart, reading  the columns                                                               
from left to right.                                                                                                             
                                                                                                                                
8:59:53 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG asked  if there is a  column that totals                                                               
the amount of contributions over the 30 years.                                                                                  
                                                                                                                                
9:00:10 AM                                                                                                                    
                                                                                                                                
MR.  LAWSON  noted  that  that  amount is  shown  in  the  column                                                               
entitled,  "End  of  Year  HRA  Balance."    He  offered  further                                                               
details.                                                                                                                        
                                                                                                                                
9:01:21 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG said  he  wants to  know  if there  are                                                               
totals listed before interest.                                                                                                  
                                                                                                                                
9:01:51 AM                                                                                                                    
                                                                                                                                
MR.  LAWSON  indicated  that  the  committee  doesn't  have  that                                                               
listed, but, based on a spreadsheet  he had open in front of him,                                                               
he said, "That  is just a hair over $20,000."   He continued with                                                               
his  review.   He  noted that  the  pre-Medicare composite  trend                                                               
factor represents an average of medical and prescription drugs.                                                                 
                                                                                                                                
9:03:17 AM                                                                                                                    
                                                                                                                                
MR. LAWSON, in response to  Representative Seaton, confirmed that                                                               
the pre-Medicare  composite trend uses  rounding of numbers.   He                                                               
added,  "And   some  of  that   also  is  an  interplay   of  the                                                               
prescription  drug assumptions,  which is  a higher  ... starting                                                               
trend  amount,   and  the  medical   inflation,  which   we  have                                                               
decreasing at a slower rate, but starting at a lower point."                                                                    
                                                                                                                                
9:04:36 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER asked,  "So, this number of  $7,319 ... is                                                               
the subsidy base  of $5,962, increased by roughly  12 percent per                                                               
year for the two years here?"                                                                                                   
                                                                                                                                
9:04:45 AM                                                                                                                    
                                                                                                                                
MR. LAWSON answered  that's correct, but he said  that 11 percent                                                               
would perhaps be more accurate.                                                                                                 
                                                                                                                                
9:06:04 AM                                                                                                                    
                                                                                                                                
MR. LAWSON  noted that the  subsidy base increases year  to year,                                                               
but at  a slower pace than  the composite premium.   He explained                                                               
that is because  it is being limited to 5  percent, versus the 9-                                                               
11 percent seen  in the premium growth.  He  pointed out that the                                                               
subsidy,  beginning at  age  55  through age  59,  is  zero.   He                                                               
explained, "That  is a result  of the provision that  the subsidy                                                               
will not  begin until five  years prior to  Medicare eligibility.                                                               
During that five years ...,  the retiree will then be responsible                                                               
for the entire  premium amount, receiving zero subsidy."   At age                                                               
60, the  retiree is eligible for  a subsidy.  He  offered further                                                               
details.                                                                                                                        
                                                                                                                                
MR. LAWSON  highlighted where  the table  shows that  the retiree                                                               
would be  required to  make a  contribution at  age 55,  the year                                                               
after  retirement.   The  retiree would  be  responsible for  the                                                               
entire premium  and remain so  for five years, until  the system-                                                               
sponsored   subsidy  begins,   at  which   point  the   retiree's                                                               
contribution would drop.  He  explained that that's the result of                                                               
subtracting  the  retiree  subsidy  from  the  composite  premium                                                               
amount.                                                                                                                         
                                                                                                                                
9:11:00 AM                                                                                                                    
                                                                                                                                
MR.  LAWSON, regarding  the beginning  year health  reimbursement                                                               
account balance  and the health care  reimbursement "spend down,"                                                               
said the  "HRA spend"  amount in the  first year  [of retirement]                                                               
would equate to  the entire premium amount for  which the retiree                                                               
is responsible.   He stated  that after pulling that  amount out,                                                               
one would expect a difference in  the HRA balance; however, it is                                                               
important  to  remember  that  the  money  left  will  grow  with                                                               
interest over the  remainder of the year.  The  amount in the HRA                                                               
spend  column  reflects  that  interest.     He  offered  further                                                               
details.                                                                                                                        
                                                                                                                                
9:13:14 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON observed:                                                                                                          
                                                                                                                                
     In  ... the  last  column  and the  third  to the  last                                                                    
     column we  have ... [$42,751], and  that actually shows                                                                    
     a  retiree  contribution  of   that  amount,  but  it's                                                                    
     actually being  spent from  the HRA.   Now that  was an                                                                    
     employer  contribution  into the  employer-funded  HRA,                                                                    
     but it is still money  that's available for health care                                                                    
     to the retiree.  So, this is assuming that money will                                                                      
     make that payment.  Is that correct?                                                                                       
                                                                                                                                
9:13:50 AM                                                                                                                    
                                                                                                                                
MR. LAWSON  answered in the  affirmative.  He stated,  "I believe                                                               
that the way  the bill was written, the payment  will come out of                                                               
the HRA until it's exhausted,  but the retiree can also designate                                                               
... that balance to pay for  other expenses, as well, such as [a]                                                               
deductible or if  they have some other  permissible expenses that                                                               
they wanted to get reimbursed for."                                                                                             
                                                                                                                                
9:14:14 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON observed  that the employee at year 32  on the table                                                               
will  have to  come up  with  approximately $13,500  in order  to                                                               
supplement the HRA.                                                                                                             
                                                                                                                                
9:15:02 AM                                                                                                                    
                                                                                                                                
MR. LAWSON  responded that's  correct, "as  the remainder  of the                                                               
premium contribution."                                                                                                          
                                                                                                                                
9:15:16 AM                                                                                                                    
                                                                                                                                
CHAIR  SEATON made  some other  observations based  on the  first                                                               
table.  He indicated that the  good thing about the table is that                                                               
it shows that there  is a huge problem.  He  said the numbers are                                                               
"incredible to  most of  us."   He offered  further details.   He                                                               
noted that the medical base is  one-sixth of total salary, but by                                                               
the year before  retirement, 40 percent of salary is  eaten up in                                                               
medical costs.   With an advance apology to Mr.  Lawson, he said,                                                               
"Actuarials  are  kind of  fortune  tellers  or soothsayers,  and                                                               
they're projecting out  these numbers, and they  just become kind                                                               
of incredible  to me."   He said  the committee is  attempting to                                                               
create a system that "works within  the numbers" and won't put an                                                               
employee at  risk of losing  all his/her medical [coverage].   He                                                               
stated, "We're assuming  in the model that health  care is really                                                               
only growing at 5 percent."   However, if it grows at 10 percent,                                                               
an employee  would be paying  more in medical than  his/her total                                                               
salary.                                                                                                                         
                                                                                                                                
9:18:49 AM                                                                                                                    
                                                                                                                                
MR. LAWSON  responded that  he thinks it's  important to  keep in                                                               
mind  that  "these are  retired  medical  valuation trends"  and,                                                               
according  to  actuarial  guidelines and  standards,  those  high                                                               
medical trends  do need to  decrease on a  long-range projection.                                                               
He pointed out that using 5  percent rather than the standard 3.5                                                               
percent assumption  used for inflation  purposes adds  an element                                                               
of conservatism.                                                                                                                
                                                                                                                                
CHAIR SEATON said  he did not intend his previous  comments to be                                                               
a challenge; he  wants the committee to be aware  that staying at                                                               
6 percent, rather than 5 percent,  for example, would result in a                                                               
much  greater  discrepancy  between  the  subsidy  base  and  the                                                               
composite medical amount.                                                                                                       
                                                                                                                                
9:20:57 AM                                                                                                                    
                                                                                                                                
CHAIR  SEATON  said,  "You  can  see why  my  staff  and  I,  and                                                               
everybody  that's been  trying  to deal  with  these numbers,  is                                                               
going kind  of nuts trying to  figure out what there  is that can                                                               
work."   He warned that  the legislature  must be careful  not to                                                               
create a  system that says a  person has access to  medical care,                                                               
but he/she doesn't  have money for that access and  is out of the                                                               
plan and  then ineligible when  he/she turns 65  because coverage                                                               
lapsed.   He  also warned  against a  system where  people cannot                                                               
retire before age 65 without  losing medical coverage.  He stated                                                               
that medical  coverage is the  most important component  and that                                                               
is the challenge of the committee in working on HB 238.                                                                         
                                                                                                                                
CHAIR SEATON  directed attention  to the  next page,  which shows                                                               
the PERS "other" early hire at 2  percent.  He said it shows that                                                               
"the HRA actually pays for three  years and there's only [a] one-                                                               
year gap in the coverage."  He offered further details.                                                                         
                                                                                                                                
9:25:42 AM                                                                                                                    
                                                                                                                                
MR. LAWSON  said it's important  to note that, under  the current                                                               
system, the entire  gross retiree premium cost would  be paid for                                                               
by  the system  so that  the  retiree is  incurring virtually  no                                                               
premium  sharing  or  contribution  expenses  under  the  current                                                               
program.  He continued:                                                                                                         
                                                                                                                                
     In  this 2  percent  scenario, we  see  that the  total                                                                    
     state subsidy of $200,000 still  remains constant.  And                                                                    
     that represents just  a little bit under  40 percent of                                                                    
     those  entire costs.    By  the time  you  add the  HRA                                                                    
     reimbursement in,  the system  has contributed  or been                                                                    
     responsible  for over  67 percent  of  the ...  retiree                                                                    
     health costs,  at this  point.  And  so, looking  at it                                                                    
     from a perspective of cost  share ... that's actually a                                                                    
     fairly  large percentage  or a  substantial subsidy  or                                                                    
     contribution   towards   their   health   care   costs,                                                                    
     particularly in relationship to  looking at the current                                                                    
     marketplace  and what  other  employers and  government                                                                    
     agencies are doing.                                                                                                        
                                                                                                                                
9:27:01 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GATTO  mentioned  that his  21-year-old  daughter                                                               
signed off his  plan and is [covered by  the Consolidated Omnibus                                                               
Budget Reconciliation  Act of  1985 (COBRA)],  at about  $900 per                                                               
month.                                                                                                                          
                                                                                                                                
9:27:38 AM                                                                                                                    
                                                                                                                                
MR. LAWSON, in  response to a question  from Representative Gatto                                                               
regarding  the price  of  insurance for  someone  if he/she  were                                                               
self-paying, said there is a starting  base of $7,318 for a group                                                               
rate.   He  surmised that  on  an individual  basis, that  amount                                                               
would probably be  closer to $10,000-$11,000.  He  said there are                                                               
two  issues:   One,  a  self-paid plan  would  certainly be  more                                                               
expensive; and  two, it would  be hard to find  such a plan.   He                                                               
said, "That is  why access, without evidence  of insurability is,                                                               
in itself, a benefit."                                                                                                          
                                                                                                                                
CHAIR  SEATON observed  that the  individual, even  continuing on                                                               
COBRA, is "apparently costing more."                                                                                            
                                                                                                                                
MR. LAWSON  said to keep  in mind "that  we may not  be comparing                                                               
apples and apples in those two numbers."                                                                                        
                                                                                                                                
9:32:49 AM                                                                                                                    
                                                                                                                                
MR. LAWSON compared aspects of  table 4, which shows PERS "other"                                                               
late hire, to table 5, which  shows PERS "other" with spouse at 2                                                               
percent HRA.   He said,  "All else remaining constant,  the total                                                               
premium amount is  actually going to double  for this individual"                                                               
[with covered spouse].   He said, "So,  while their contributions                                                               
will  double,  their HRA  balance  ...  remains constant.    This                                                               
results in ... a substantial increase to the net retiree."                                                                      
                                                                                                                                
9:34:20 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON said  there is a lot for the  committee to consider.                                                               
He  reviewed  some  previously   stated  considerations  for  the                                                               
committee to make.                                                                                                              
                                                                                                                                
9:36:41 AM                                                                                                                    
                                                                                                                                
MELANIE MILLHORN, Director, Health  Benefits Section, Division of                                                               
Retirement & Benefits, Department  of Administration, stated that                                                               
she  thinks Chair  Seaton,  through the  tables  and through  his                                                               
testimony,  has  accurately depicted  that  medical  costs are  a                                                               
large issue  and the balance  needed by employers to  provide the                                                               
coverage  and the  employees' need  to have  the coverage  is the                                                               
issue before the committee.                                                                                                     
                                                                                                                                
9:37:08 AM                                                                                                                    
                                                                                                                                
MS.  SHOWS,  in  response  to   a  question  from  Chair  Seaton,                                                               
suggested  that the  committee may  want to  consider the  salary                                                               
levels as slightly inflated.                                                                                                    
                                                                                                                                
9:37:50 AM                                                                                                                    
                                                                                                                                
CHAIR  SEATON  clarified  that  the  average  salary  equals  the                                                               
average salary in  the system, not the  average beginning salary.                                                               
He also asked  that the committee remember that the  1 percent or                                                               
2 percent  is a  percentage of  the system  class salary,  not of                                                               
individual  salaries.   He  explained,  "Because  you can't  have                                                               
discrimination  between people  that  are getting  paid more  and                                                               
less under a federal health care reimbursement account."                                                                        
                                                                                                                                
9:39:01 AM                                                                                                                    
                                                                                                                                
MS. MILLHORN  said over 25  states have set their  retirement age                                                               
at  65.   She  said  the  reason  is  that that's  when  benefits                                                               
commence and  that's also the  age at which those  retirees would                                                               
be entitled to medical benefits.                                                                                                
                                                                                                                                
[HB 238 was heard and held.]                                                                                                    
                                                                                                                                
The committee took an at-ease from 9:40:29 AM to 9:43:49 AM.                                                                
                                                                                                                                
SB  87-SEAT BELT VIOLATION AS PRIMARY OFFENSE                                                                               
                                                                                                                                
9:43:52 AM                                                                                                                    
                                                                                                                                
CHAIR  SEATON  announced that  the  last  order of  business  was                                                               
SENATE  BILL NO.  87, "An  Act relating  to motor  vehicle safety                                                               
belt violations."                                                                                                               
                                                                                                                                
9:44:03 AM                                                                                                                    
                                                                                                                                
SENATOR CON  BUNDE, Alaska  State Legislature,  as sponsor  of SB                                                               
87,  apologized for  his  absence from  the  House State  Affairs                                                               
Standing  Committee's first  hearing  of  SB 87.    He asked  the                                                               
committee to  indulge him while  he addressed a couple  of issues                                                               
that "seemed to have been  prominent in some of the discussions."                                                               
He indicated that he has heard  from a countless amount of people                                                               
who have said that they don't  mind a seatbelt law but don't want                                                               
a  primary one.    The  other comment  heard  frequently is  that                                                               
people  say they  always wear  their seatbelts;  they just  don't                                                               
want someone telling  them to wear it.  He  added, "Of course, if                                                               
they always  wear their belt,  they would  not be subject  to any                                                               
penalty under this law."                                                                                                        
                                                                                                                                
SENATOR BUNDE  reminded the committee  that there currently  is a                                                               
primary seatbelt  law for people  under 16, and he  observed that                                                               
"the libertarian  streak of Alaska  did not seem to  be irritated                                                               
by that  portion of a  primary law."   The other concern  that he                                                               
said he's  heard voiced is  that the  police will use  [a primary                                                               
seatbelt law] as  a trumped up excuse to make  traffic stops.  He                                                               
said police have told him that  if they want to make a preemptive                                                               
stop, there  are several  issues that are  far more  visible than                                                               
whether a  person is wearing a  seatbelt or not.   He listed some                                                               
of them.                                                                                                                        
                                                                                                                                
9:46:29 AM                                                                                                                    
                                                                                                                                
SENATOR BUNDE  addressed the  notion that "it's  my right  to not                                                               
wear  a belt  and suffer  the consequences."   He  said he  would                                                               
agree  with that  if not  for  the matter  of the  impact on  the                                                               
insurance pool  that drivers  belong to that  is affected  by the                                                               
occurrence of accidents.  He  mentioned [the National Association                                                               
for  Stock Car  Auto  Racing  (NASCAR)] and  said  there are  two                                                               
reasons NASCAR  drivers are required  to wear seatbelts:   One is                                                               
for safety,  and the other is  that seatbelts keep the  driver in                                                               
better control of the vehicle.  He offered further details.                                                                     
                                                                                                                                
9:48:12 AM                                                                                                                    
                                                                                                                                
SENATOR BUNDE said  the state currently has  a secondary seatbelt                                                               
law, because  not having  it would  have cost  the state  a great                                                               
deal  of  money  -  federal  funds.    He  stated  that  had  the                                                               
legislature passed a primary seatbelt  law last year, 7-8 Alaskan                                                               
lives would have been saved, according  to statistics.  He said a                                                               
father who  lost his 19-year-old son  asked him to use  his story                                                               
during  testimony.   He said  teenagers  tend to  think they  are                                                               
"bullet-proof" and often  don't wear a seatbelt.   He stated that                                                               
with  the  adoption  of  a  primary  seatbelt  law,  the  use  of                                                               
seatbelts  would  go up  approximately  10-12  percent.   Senator                                                               
Bunde passed  out a [photo  of a vehicle accident]  to illustrate                                                               
why seatbelt use is so important.   He said people seem to accept                                                               
the notion that  a smoke detector in  a home is a  wise idea, and                                                               
he mentioned carbon monoxide detectors.                                                                                         
                                                                                                                                
9:51:14 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARDNER  asked Senator  Bunde  to  expand on  his                                                               
comment regarding federal funds.                                                                                                
                                                                                                                                
9:51:31 AM                                                                                                                    
                                                                                                                                
SENATOR BUNDE revealed  that last year the state  lost $4 million                                                               
in highway safety funds.  He  said there's a total of $18 million                                                               
available; the first  year's allotment would be  $4 million, then                                                               
$2 million for the next 4 years.                                                                                                
                                                                                                                                
9:52:04 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARDNER asked  Senator  Bunde  if he  anticipates                                                               
that a primary seatbelt law would reduce insurance rates.                                                                       
                                                                                                                                
9:52:25 AM                                                                                                                    
                                                                                                                                
SENATOR BUNDE said he doesn't expect  a reduction, but "if we can                                                               
have a decrease in the increase,  I think that would be something                                                               
we should strive toward."                                                                                                       
                                                                                                                                
9:52:59 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GATTO  offered  his  understanding  that  Senator                                                               
Bunde's  remarks  regarding  the  insurance rates  and  costs  to                                                               
others has  to do with  the possibility  that someone may  not be                                                               
able to  pay for hospital  costs and  those cost would  be passed                                                               
on.  He said, "There's a second  side to this sword, and that is:                                                               
people  in a  seatbelt  in  a major  accident  could be  horribly                                                               
injured and  not killed.  And  the killed person has  very little                                                               
cost,  but the  horribly  injured person  could have  significant                                                               
costs.   So, I cannot guarantee  or even have an  indication that                                                               
the use of a seatbelt will  save you money."  Regarding the 10-12                                                               
percent increase  [in people  who would  wear seatbelts  if there                                                               
were  a primary  seatbelt law],  he asked  if that  percentage is                                                               
"from existing numbers or percentage points."                                                                                   
                                                                                                                                
9:54:04 AM                                                                                                                    
                                                                                                                                
SENATOR  BUNDE responded  that it's  from existing  numbers.   He                                                               
recollected that  currently there  is about  an 84  percent usage                                                               
rate and a  statewide survey showed that  70-75 percent supported                                                               
a primary seatbelt law.                                                                                                         
                                                                                                                                
9:54:29 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO  asked if  the $4  million in  federal funds                                                               
were truly lost or reappropriated.                                                                                              
                                                                                                                                
9:54:43 AM                                                                                                                    
                                                                                                                                
SENATOR BUNDE said  his knowledge is that the  $4 million dollars                                                               
was not received for highway safety.                                                                                            
                                                                                                                                
9:54:54 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GATTO  referred  to Senator  Bunde's  mention  of                                                               
carbon monoxide  detectors.  He  said not  having one may  risk a                                                               
person's life, but it also may  risk the lives of other people in                                                               
the same  facility.  He said,  "Not wearing a seatbelt  will have                                                               
no effect on me as a  passenger wearing a seatbelt."  He recalled                                                               
that Senator Bunde  mentioned "that if you can just  stay in your                                                               
car  and maybe  steer  that  you might  prevent  something."   He                                                               
added,  "Although  I  think  in  these  very  tragic  situations,                                                               
usually everybody's  a passenger  and nobody's  a driver  when we                                                               
suddenly turn upside-down or roll."                                                                                             
                                                                                                                                
9:55:37 AM                                                                                                                    
                                                                                                                                
SENATOR  BUNDE  said,  "I  see  very  little  difference  in  the                                                               
libertarian   attitude  of   Alaskans  between   requiring  smoke                                                               
detectors or carbon monoxide detectors and requiring seatbelts."                                                                
                                                                                                                                
9:56:01 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG moved to  adopt the committee substitute                                                               
(CS) for  SB 87,  Version 24-LS0457\F,  Luckhaupt, 4/11/05,  as a                                                               
work draft.   There being no objection, Version F  was before the                                                               
committee.                                                                                                                      
                                                                                                                                
9:56:55 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  reviewed the  changes made to  the bill                                                               
through  Version F.    He said  in current  law,  to "operate"  a                                                               
vehicle could  mean to turn on  the radio or the  heater, without                                                               
the engine even being on.  The language  on page 1, line 7 of the                                                               
bill was changed  to use the word "drive"  rather than "operate".                                                               
Another term  that was  changed was  "motor vehicle",  because it                                                               
was too  broad.  He directed  attention to the language  added on                                                               
page 2, which read:                                                                                                             
                                                                                                                                
               (5) operators or passengers of motorcycles,                                                                  
     motor-driven  cycles,  off-highway  vehicles,  electric                                                                
     personal  mobility vehicles,  snowmobiles, and  similar                                                                
     vehicles not designed to be operated on a highway.                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG emphasized  that  "not  designed to  be                                                           
operated on a  highway" only refers to  the off-highway vehicles.                                                           
He also pointed out that "we  have limited this to highways."  He                                                               
said highways are currently defined to include public roads.                                                                    
                                                                                                                                
SENATOR BUNDE  said he is  not aware of any  enforcement problems                                                               
that the  current law  and definitions  had created;  however, he                                                               
stated his acceptance of the changes made in Version F.                                                                         
                                                                                                                                
9:59:57 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON asked  again if there was any  objection to adopting                                                               
Version  F.   [Although  there  was no  response,  Version F  was                                                               
treated as adopted.]                                                                                                            
                                                                                                                                
10:00:12 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  GARDNER,   regarding  Senator   Bunde's  previous                                                               
comparison of this bill to  a past bill regarding carbon monoxide                                                               
(CO) detectors,  asked, "How  would you  feel about  allowing the                                                               
police department to inspect your home for a CO detector?"                                                                      
                                                                                                                                
10:01:02 AM                                                                                                                   
                                                                                                                                
SENATOR  BUNDE admitted  that he  was "having  a little  fun with                                                               
Representative  Gatto."    He  said he  thinks  when  there's  an                                                               
accident the  fire department  "does indeed  inspect."   He added                                                               
that hotel  units have inspections.   He  said, "I think  by your                                                               
question you're assuming  that the police are going  to make this                                                               
a major enforcement issue, and I don't make that assumption."                                                                   
                                                                                                                                
                                                                                                                                
10:01:32 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE GARDNER  said she recently  had occasion to  ask a                                                               
friend who's a  member of the Anchorage Police  Department if "it                                                               
would  be something  that  ... traffic  police  would be  looking                                                               
for," and  [the officer] said yes.   In fact, the  police officer                                                               
told  her that  it  is something  they love  to  do; it's  called                                                               
"fishing."                                                                                                                      
                                                                                                                                
10:02:15 AM                                                                                                                   
                                                                                                                                
SENATOR  BUNDE  said  the  police  officer  still  has  to  prove                                                               
probable cause for the initial stop.                                                                                            
                                                                                                                                
10:02:20 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE GARDNER  responded, "But they would  have probable                                                               
cause if you weren't wearing a seatbelt."                                                                                       
                                                                                                                                
10:02:37 AM                                                                                                                   
                                                                                                                                
SENATOR BUNDE  said the officer  would have to prove  that he/she                                                               
would likely have seen that [before  the stop].  He mentioned the                                                               
"turnstile jumper laws"  in New York.  He said,  "When they start                                                               
enforcing the small laws, a  lot of major criminals got captured,                                                               
too."                                                                                                                           
                                                                                                                                
10:03:05 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  GATTO mentioned  an amendment  that would  change                                                               
the fine from $15 to $100.  He asked if that would be offered.                                                                  
                                                                                                                                
10:03:39 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE GARDNER  explained that that was  an amendment she                                                               
had considered offering; however, some  of the language in it she                                                               
thought would not  be a legal solution.  She  also noted that the                                                               
fine for not wearing a seatbelt  in Anchorage is already $200 and                                                               
she doesn't  want to add  an additional  $100 state fine  to that                                                               
amount.                                                                                                                         
                                                                                                                                
10:04:12 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  GRUENBERG  said  "operating" and  "driving"  only                                                               
apply to the driver, not the passenger.                                                                                         
                                                                                                                                
10:04:44 AM                                                                                                                   
                                                                                                                                
SENATOR  BUNDE responded  that that's  not  his understanding  of                                                               
current law.                                                                                                                    
                                                                                                                                
10:04:57 AM                                                                                                                   
                                                                                                                                
CHAIR SEATON  stated his understanding that  current law provides                                                               
for both the operator and for children or passengers.                                                                           
                                                                                                                                
10:05:11 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  RAMRAS  moved  to  report CSSB  87,  Version  24-                                                               
LS0457\F,  Luckhaupt, 4/11/05  out of  committee with  individual                                                               
recommendations and the accompanying fiscal notes.                                                                              
                                                                                                                                
10:05:42 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE GATTO objected.                                                                                                  
                                                                                                                                
10:05:56 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   GRUENBERG,  in   response  to   a  request   for                                                               
clarification  from  Representative  Gatto,  explained  that  the                                                               
current  bill repeals  the provision  of law  that says  a person                                                               
cannot have  "a primary  stop for the  seatbelt," and  thus would                                                               
adopt the primary stop.  He offered further details.                                                                            
                                                                                                                                
10:07:12 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE LYNN asked how an  officer will know if someone is                                                               
wearing a seatbelt.                                                                                                             
                                                                                                                                
10:07:30 AM                                                                                                                   
                                                                                                                                
SENATOR  BUNDE said  he's  sure there  are  situations where  the                                                               
seatbelt  would  not  be  highly visible;  however,  he  said  an                                                               
officer should be  able to see a seatbelt in  city traffic, where                                                               
a shoulder strap would be visible.                                                                                              
                                                                                                                                
10:07:54 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  RAMRAS, in  response to  Chair Seaton,  expressed                                                               
his desire to maintain his previous motion.                                                                                     
                                                                                                                                
10:09:07 AM                                                                                                                   
                                                                                                                                
A  roll  call vote  was  taken.   Representatives  Lynn,  Ramras,                                                               
Gruenberg, and Seaton voted in favor of HCS SB 87, Version 24-                                                                  
LS0457\F, Luckhaupt, 4/1/05.   Representatives Gatto, Elkins, and                                                               
Gardner  voted  against  it.    Therefore,  HCS  SB  87(STA)  was                                                               
reported out of the House State Affairs Standing Committee by a                                                                 
vote of 4-3.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
State Affairs Standing Committee meeting was adjourned at                                                                       
10:09:17 AM.                                                                                                                  

Document Name Date/Time Subjects