02/20/2003 08:02 AM House STA
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+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
February 20, 2003
8:02 a.m.
MEMBERS PRESENT
Representative Bruce Weyhrauch, Chair
Representative Jim Holm, Vice Chair
Representative Nancy Dahlstrom
Representative Bob Lynn
Representative Paul Seaton
Representative Ethan Berkowitz
Representative Max Gruenberg
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 64
"An Act relating to court approval of the purchase of structured
settlements."
- MOVED CSHB 64(STA) OUT OF COMMITTEE
HOUSE BILL NO. 18
"An Act relating to the liability of parents and legal guardians
of minors who destroy property."
- HEARD AND HELD
HOUSE BILL NO. 46
"An Act relating to ballots."
- MOVED CSHB 46(STA) OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 64
SHORT TITLE:PURCHASE OF STRUCTURED SETTLEMENTS
SPONSOR(S): REPRESENTATIVE(S)FOSTER
Jrn-Date Jrn-Page Action
01/27/03 0075 (H) READ THE FIRST TIME -
REFERRALS
01/27/03 0075 (H) STA, JUD
01/27/03 0075 (H) REFERRED TO STATE AFFAIRS
02/11/03 (H) STA AT 8:00 AM CAPITOL 102
02/11/03 (H) Heard & Held
MINUTE(STA)
02/20/03 (H) STA AT 8:00 AM CAPITOL 102
BILL: HB 18
SHORT TITLE:PARENTAL LIABILITY FOR CHILD'S DAMAGE
SPONSOR(S): REPRESENTATIVE(S)MEYER
Jrn-Date Jrn-Page Action
01/21/03 0036 (H) PREFILE RELEASED (1/10/03)
01/21/03 0036 (H) READ THE FIRST TIME -
REFERRALS
01/21/03 0036 (H) STA, JUD
01/21/03 0036 (H) REFERRED TO STATE AFFAIRS
02/07/03 0153 (H) COSPONSOR(S): ANDERSON
02/20/03 (H) STA AT 8:00 AM CAPITOL 102
BILL: HB 46
SHORT TITLE:PRIMARY ELECTION BALLOTS
SPONSOR(S): REPRESENTATIVE(S)HAWKER
Jrn-Date Jrn-Page Action
01/21/03 0043 (H) PREFILE RELEASED (1/10/03)
01/21/03 0043 (H) READ THE FIRST TIME -
REFERRALS
01/21/03 0043 (H) STA
01/21/03 0043 (H) REFERRED TO STATE AFFAIRS
02/20/03 (H) STA AT 8:00 AM CAPITOL 102
WITNESS REGISTER
AL TAMAGNI, Broker
Structured Financial Associates;
Member, National Structured Trade Association
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 64.
PAUL LaBOLLE, Staff
to Representative Richard Foster
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Informed the committee of two possible
amendments to HB 64.
JERRY LUCKHAUPT, Attorney
Legislative Legal Counsel
Legislative Legal and Research Services
Legislative Affairs Agency
Juneau, Alaska
POSITION STATEMENT: Answered questions during discussion of HB
64.
REPRESENTATIVE MIKE HAWKER
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified as sponsor of HB 18.
LAURA GLAISER, Director
Division of Elections
Office of the Lieutenant Governor
Juneau, Alaska
POSITION STATEMENT: Answered questions on HB 18.
VICKI HORODYSKI
Fairbanks, Alaska
POSITION STATEMENT: During the hearing on HB 18, expressed her
concern that, if this legislation were adopted, families may
reconsider their decisions to become guardians to or adopt high-
risk children, because of the financial risk that would be
involved.
CARL ROSE, Executive Director
Association of Alaska School Boards (AASB)
Anchorage, Alaska
POSITION STATEMENT: Testifying on behalf of AASB, told the
committee that that association would like to see the cap
removed, during the hearing on HB 18.
SEAN HALLORAN
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing on HB 46.
JENNIFER RUDINGER, Executive Director
Alaska Civil Liberties Union
Anchorage, Alaska
POSITION STATEMENT: Testified on behalf of that organization in
support of the proposed committee substitute for HB 46.
ACTION NARRATIVE
TAPE 03-11, SIDE A
Number 0001
CHAIR BRUCE WEYHRAUCH called the House State Affairs Standing
Committee meeting to order at 8:02 a.m. Representatives Holm,
Seaton, Dahlstrom, Lynn, Berkowitz, and Weyhrauch were present
at the call to order. Representative Gruenberg arrived as the
meeting was in progress.
HB 64-PURCHASE OF STRUCTURED SETTLEMENTS
CHAIR WEYHRAUCH announced that the first order of business was
HOUSE BILL NO. 64, "An Act relating to court approval of the
purchase of structured settlements."
Number 0150
AL TAMAGNI, Broker, Structured Financial Associates; Member,
National Structured Settlements Trade Association, testified his
support in HB 64. He noted that this legislation has passed in
various forms in 33 other states. This legislation is necessary
in Alaska primarily for the protection of injured people to whom
the [structured] payments are made. Basically, this is a
consumer protection bill. He explained that there have been
people who are to receive future periodic payments from workers'
compensation cases, personal injury cases, and wrongful death
cases. Those people have been approached to sell those
annuities for a lump of cash at a substantial discount and with
the loss of future tax-free benefits. Many of those who have
sold the aforementioned annuities have returned to the welfare
rolls and general Medicare relief and the like. Mr. Tamagni
reiterated that this legislation should be passed and since it's
consumer protection legislation, there should be no partisan
politics.
REPRESENTATIVE BERKOWITZ inquired as to the following: the
number people who are approached to have a structured settlement
in the state; the number of people who have structured
settlements; and the impact of this legislation.
MR. TAMAGNI informed the committee that no statistics are kept
by the trial bar or the insurance companies. He pointed out
that these are private settlements that aren't all a matter of
public record.
REPRESENTATIVE BERKOWITZ inquired as to the number of
settlements in Alaska annually. He further inquired as to the
percentage of settlements that lead to structured settlements.
MR. TAMAGNI answered that the number of settlements in the state
could be obtained from the court system. With regard to the
number of cases settled by a structured settlement, Mr. Tamagni
reiterated that no statistics are available. In further
response to Representative Berkowitz, Mr. Tamagni said that he
didn't believe there are any accurate statistics available from
other states.
Number 0483
REPRESENTATIVE SEATON directed attention to page 1, Section 1,
paragraph (1) which specifies [that this legislation] only
applies to court filed and approved structured settlements.
Therefore, he surmised that this legislation doesn't speak to
private structured settlements.
MR. TAMAGNI explained that there are many instances in which
cases have been settled when no lawsuit has been filed. This
legislation addresses those people who want to sell their
benefits and requires that those people go through a court
approval for that process.
REPRESENTATIVE SEATON returned attention to page 1, Section 1,
paragraph (1) and recalled that the language "action filed"
meant a court action. He asked if that is Mr. Tamagni's
understanding.
MR. TAMAGNI related his understanding that an action is one in
which a lawsuit is filed in the appropriate state. However,
there are cases for which no lawsuit is filed because the
parties reach agreement prior to filing the lawsuit. Therefore,
no action is involved because nothing was ever filed with the
court.
REPRESENTATIVE SEATON clarified that Representative Gruenberg
has pointed out the section with "or could've been filed"
language and thus would include [private structured
settlements].
Number 0773
MR. TAMAGNI, in response to Representative Berkowitz, confirmed
that he does business in structured settlements. In further
response, Mr. Tamagni clarified that he is approached by either
a plaintiff attorney or the defense counsel. In most cases, the
plaintiff attorney will call and inform Mr. Tamagni of a
severely injured individual for which there is concern of a
proliferation of a lump cash and thus there is the desire to do
a structured annuity to preserve the future benefits on a tax
exempt basis. Therefore, a package annuity is prepared and
placed with the concurrence of the defense and then the injured
party receives the tax-free benefits. In response to
Representative Berkowitz's question regarding the number of
annuities placed annually, Mr. Tamagni related his personal
experience of handling 25-40 cases per year. He noted that
there is one other person in Anchorage in the same firm who
performs the same service. The majority of structured
settlements are handled by out-of-state brokers. In response to
Representative Berkowitz, Mr. Tamagni said he had no idea of the
portion of cases he handles because there is no statistical
information with regard to the number of structured settlements
that are placed per year per state. However, he estimated that
[he and the other person] handle maybe 5-10 percent of the total
cases in the state that are settled with a structured annuity.
REPRESENTATIVE BERKOWITZ surmised then that it would be fair to
say that there are approximately 1,000 cases annually.
MR. TAMAGNI agreed and noted that would include automobile
accidents.
Number 0950
REPRESENTATIVE GRUENBERG highlighted that there already exists a
similar provision, AS 09.17.040, which addresses periodic
payments. He asked if Mr. Tamagni was familiar with that
provision, which is found in the Tort Reform chapter.
MR. TAMAGNI clarified that these structured annuities are
periodic payments. The periodic payments are received from a
structured annuity.
REPRESENTATIVE GRUENBERG pointed out that the current statute,
AS 09.17.040(f), includes the following sentence: "Payments may
be modified only in the event of the death of the judgment
creditor, in which case payments may not be reduced or
terminated, but shall be paid to persons to whom the judgment
creditor owed a duty of support, as provided by law, immediately
before death." Representative Gruenberg interpreted that to
mean that the court has no jurisdiction to allow a lump sum
payment under the aforementioned statute. He asked if Mr.
Tamagni knew of a case which would support modifying the
aforementioned statute such that it allowed the court to
entertain a motion for a lump sum payment as is being done in HB
64.
MR. TAMAGNI said he didn't believe the committee wanted to
confuse structured annuity payments and periodic payments
because they are synonymous under Section 104 A2 of the Internal
Revenue Service (IRS) code. Mr. Tamagni surmised that HB 64 is
attempting to lay out the terms, conditions, and protection that
should be guaranteed for those payments to be converted to a
partial lump sum. Mr. Tamagni indicated [that HB 64] is similar
to the scenario in which the legislature took action to curb the
selling of permanent fund dividends (PFD). Therefore, Mr.
Tamagni related his belief that HB 64 attempts to meet the same
standard and principle without modifying any section of the
civil code beyond that specified.
Number 1230
PAUL LaBOLLE, Staff to Representative Richard Foster, Alaska
State Legislature, informed the committee that the sponsor has
some amendments that he would like incorporated into a committee
substitute (CS). One of the amendments is the result of the
Alaska courts' desire for the following: page 3, [line 20],
after "maintained" insert "or the payee is domiciled in".
Clarification that the language to be inserted would read "or
where the payee is domiciled" was given. Mr. LaBolle mentioned
another issue regarding whether the jurisdiction would be
limited to superior court and announced that [the sponsor] has
no stance with regard to whether that should be changed or not.
Number 1403
REPRESENTATIVE GRUENBERG moved that the committee adopt
Amendment 1, which read as follows:
page 3, line 20, after "maintained",
Insert "or where the payee is domiciled"
There being no objection, Amendment 1 was adopted.
REPRESENTATIVE GRUENBERG informed the committee that he
discussed the potential amendment dealing with court system
jurisdiction with a representative from the court system.
Representative Gruenberg related his belief that most of these
structured settlements would involved damages that would, at
least, initially be above the jurisdictional limit of the
district court, $50,000. Furthermore, in some of the cases, by
the time the payee wanted to cash out, the remaining payments
would total less than $50,000. Moreover, some of these cases
would've never been filed in court and have an out-of-court
settlement, which is an enforceable contract. Therefore,
Representative Gruenberg recommended the following: page 3,
line 19, delete "superior court", insert "court of competent
jurisdiction".
REPRESENTATIVE GRUENBERG explained that this amendment would
allow either [the superior court or the district court] to have
the motion filed in the appropriate court. He said that he
believes the court system feels that the district court would
[be] competent in this area, although there had been mention as
to whether this would be more of a probate matter.
Representative Gruenberg said, "My feeling is it doesn't have to
be, it's not just a competency kind of thing, [rather] it's an
approval of a settlement." Furthermore, there are minor
settlements that can be filed in the district or superior court.
Number 1630
JERRY LUCKHAUPT, Attorney, Legislative Legal Counsel,
Legislative Legal and Research Services, Legislative Affairs
Agency, said that he viewed [structured settlements] as akin to
guardianship/conservatorship proceedings, which are solely
within the jurisdiction of the superior court. Mr. Luckhaupt
pointed out that the court has to make a finding that's in the
best interest of the payee and the payee's dependents to allow
this transfer to occur. He noted that the settlements he has
seen have been fairly large settlements and thus it seemed more
appropriate to be [under the jurisdiction] of the superior
court. Mr. Luckhaupt expressed concern with the language "court
of competent jurisdiction" because he wasn't sure that one would
want a justice court making this decision if assets are spent
down to a certain level. Therefore, Mr. Luckhaupt suggested the
following language: "superior or district court as
appropriate".
REPRESENTATIVE GRUENBERG clarified that he wasn't thinking of a
magistrate. Representative Gruenberg asked if minor settlements
can go to the district court.
MR. LUCKHAUPT answered that minor settlements can go to the
district court, although he didn't believe it to be a common
process. Mr. Luckhaupt said, "I think there could be a
difference of opinion as to the issue involved here as opposed
to those normal minor settlements ... that don't necessarily
have someone on the other side objecting to the transfer." He
explained that this was presented to him as sometimes being an
adversarial process and the minor settlements with which he is
familiar aren't adversarial.
Number 1830
REPRESENTATIVE GRUENBERG inquired as to who would be objecting
unless a conservator was appointed. If a conservator was
appointed, then there would be a conservatorship and [the case]
wouldn't be in the district court.
MR. LUCKHAUPT clarified that he was given examples in which the
payor objected to these transfers at times. For example, a
friend of the children would be involved, which would
necessitate a guardian ad litem appointment and would almost
have to go to superior court because there is a dispute.
Therefore, it seemed to be an economy of resources to have the
case in superior court, he explained. However, he noted that he
didn't have any strong feeling on it, although most states
placed this in their trial court of general jurisdiction.
MR. TAMAGNI interjected that there probably won't be a buyer for
any case under $100,000. Furthermore, there is rarely a case
with a future present value of less than $50,000. Therefore, he
estimated that 99.99 percent of the cases will be set at the
superior court level. Mr. Tamagni viewed the superior court as
the final stop where everything can be done because it reduces
the cost of the representatives of each party. Mr. Tamagni
related his belief that there is a question of competency at
some of the lower court levels and thus he encouraged the
committee to maintain the superior court's [jurisdiction] as the
initial and final jurisdiction.
Number 2046
REPRESENTATIVE BERKOWITZ identified the cost to the payee as a
concern for the consumer protection. He inquired as to the
amount brokers are compensated.
MR. TAMAGNI informed the committee that brokers aren't engaged
in this portion of the process in any way. In fact, if he
receives calls from people wanting to sell their annuities, he
tries to discourage them. Mr. Tamagni clarified that he doesn't
provide his services at all when someone wants to sell their
annuities. Mr. Tamagni explained that when people settle a
lawsuit they use a structured annuity, periodic payment under
Section 104 A2, and then he becomes involved and makes a
commission. Once people receive those payments and the desire
is to sell the annuities to whomever, he isn't involved in that
process. Those involved in the sale of the annuities are in
separate businesses, all of which are virtually out of state.
Number 2186
MR. LaBOLLE turned to another issue, which he thought would
[address] some of Representative Berkowitz's [concerns]. Mr.
LaBolle informed the committee that the National Association of
Settlement Purchasers specified that the cost of bringing a
structured settlement in for transfer is roughly $1,800-$2,500.
The National Association of Settlement Purchasers also related
to him that it take 60-90 days [to bring a structured
settlement], although the association mentioned it might be a
shorter time period in Alaska due to the volume of cases.
REPRESENTATIVE BERKOWITZ highlighted that those putting together
these structured settlements receive a flat fee ranging between
$1,800-$2,400.
MR. LaBOLLE responded that he wasn't exactly sure, but he
understood it to be the total cost to the payee, dependent upon
legal fees.
REPRESENTATIVE BERKOWITZ said that he was trying to determine
where the money goes. He pointed out that part of HB 64
requires a payee to go to a professional and thus there is a
cost for that. Furthermore, there is a cost for putting one of
these [structured settlements] together. Representative
Berkowitz said that although he agreed with the objectives [of
HB 64], he wanted to understand who is receiving transactional
fees.
MR. LaBOLLE specified that the $1,800-$2,500 doesn't include
professional advice but rather is only the cost once the
transferee firm actually supplies the material to the court.
CHAIR WEYHRAUCH announced his preference not to address the
superior court [amendment].
REPRESENTATIVE GRUENBERG noted his agreement.
Number 2370
REPRESENTATIVE SEATON moved to report HB 64, as amended, out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, CSHB 64(STA) was
reported from the House State Affairs Standing Committee.
The committee took an at-ease from 8:37 a.m. to 9:41 a.m.
HB 18-PARENTAL LIABILITY FOR CHILD'S DAMAGE
Number 2410
CHAIR WEYHRAUCH announced that the next order of business was
HOUSE BILL NO. 18, "An Act relating to the liability of parents
and legal guardians of minors who destroy property."
Number 2430
REPRESENTATIVE KEVIN MEYER, Alaska State Legislature, as sponsor
of HB 18, told the committee that the proposed legislation would
remove the cap of up to $10,000 for intentional damages caused
by a child to corporations, schools, villages, churches, and
charitable organizations. He said, "$10,000 just isn't very
much. It's not uncommon for a child to be able to go out on a
weekend and cause up to $100,000 in damage to school property."
He stated that the money [that schools spend to repair damages]
should go into the classroom to buy computers and to reduce
classroom size, for example. He noted that the Anchorage School
District suffered almost $750,000 in damages last year. It is
an ongoing and increasing problem, he said.
REPRESENTATIVE MEYER stated that at one time the cap was set at
$2,000. In 1995 the cap was raised to $10,000. He pointed out
to Chair Weyhrauch that the amount to which [HB 18] would raise
the cap has been "left open." He referred to information
[included in the committee packet] that lists the varying
amounts of caps in other states in the nation.
Number 2532
REPRESENTATIVE MEYER stated his belief that removing the cap
will have the following effects: to give school districts more
money for teaching; to make parents more aware of what their
kids are doing, where they are doing it, and who they are doing
it with; and to impress upon children that they will pay for
foolish acts. For example, Representative Meyer stated that if
his own daughter ever [was involved in vandalism] he would
[withhold] her permanent dividend for a few years and make her
go to work and reimburse him.
REPRESENTATIVE MEYER urged the committee to pass HB 18 and
offered to answer questions. He noted that [the issue] is a
priority for the Anchorage School District, therefore they will
be able to testify much better than himself.
Number 1590
CHAIR WEYHRAUCH stated that it is a fundamental policy
discussion taking place regarding whether to have a cap at all.
Number 2668
CAROL COMEAU, Superintendent, Anchorage School District, on
behalf of the school board and the community, expressed
appreciation to Representative Meyer for sponsoring HB 18. She
reminded the committee that [the Anchorage School District]
suffered a lot of vandalism last year, which peaked the need to
eliminate the cap on vandalism caused by juveniles. She said
that the district is now finding that the courts are reluctant
to assess damages, even to [$10,000] level if the juvenile does
not have the ability to pay, "or their parents do not have an
ability to pay past the age of nineteen."
MS. COMEAU said there is concern about the message being sent to
young people when there are very few consequences for vandalism.
She said she thinks that most people in the community share
Representative Meyer's aforementioned comments. "Students
should have an obligation and it may extend into their adult
life that they have to repay damages for vandalism to public
property," she said.
MS. COMEAU mentioned other acts of vandalism at Dimond High
School and Chugiak Elementary School. She urged eliminating any
cap, thereby allowing the courts to impose judgments based upon
the situation, the damage caused, and the attitudes of the
students and parents toward working off the damages and
restitution.
Number 2804
REPRESENTATIVE SEATON referred to page 1, line 14, to page 2,
line 15, and read, "without regard to legal custody but with due
consideration for the actual care and custody...". He asked
Representative Meyer to clarify that.
REPRESENTATIVE MEYER said he would defer the question to his
staff.
Number 2845
REPRESENTATIVE GRUENBERG offered the following explanation:
Generally, if the parents are divorced and custody is
awarded, there are two types of custody. There's
legal custody and physical custody. Legal custody is
a decision as to who will make decisions for the
child, generally, decisions involving health,
education, religious upbringing, that sort of thing.
And the physical custody is where the kid lives and
with whom the child spends their time. And it's
usually some form of a divided physical custody. So,
what this means is that, in determining who is
responsible among the parents - apportioning the
damages between the parents up to the limit at the
present time - the court shall do it, regardless of
who has legal custody, in the sense [of] who can make
the decisions for education and this sort of a thing.
But, the court shall consider where the child is
living and the amount of control particularly the
absent parent has.
Let's give an example. Let's say that the parents are
divorced, and one of the parents moves to another part
of the state, or even to a different state, ... and
they have joint legal custody. The parent that
actually has the child may be the only parent that has
any practical control over the child when the
vandalism occurs, and the court would then take that
into consideration in determining who was responsible
between the parents for the damages.
Number 2929
REPRESENTATIVE SEATON asked, for example, if a father does not
have physical custody during the time that a child commits
vandalism, is that father "off the hook"?
REPRESENTATIVE GRUENBERG responded that [the language in the
proposed legislation] would give the judge the discretion to
consider that factor; it's not an absolute rule.
Number 2989
REPRESENTATIVE HOLM asked about [unemancipated minors].
TAPE 03-11, SIDE B
Number 2990
REPRESENTATIVE HOLM offered the following example: A child runs
away from home, gets into a program, such as the Family Focus
program in Fairbanks, Alaska, where "the troopers say that you
cannot have any control over your child in that program, you
have no contact with that program." At that point in time, the
child commits an act of vandalism, he proposed. He asked how
the language of the proposed legislation would address that.
Number 2946
REPRESENTATIVE MEYER replied that it is his understanding that
[the parent of that child] would not be responsible for that
child's actions, if the parent had turned over the child to the
state's custody, or the state took custody of the child.
Number 2925
REPRESENTATIVE GRUENBERG, in confirmation of Representative
Meyer's reply, referred to a portion of AS 34.50.020, subsection
(b), which reads as follows [original punctuation provided]:
(b) A state agency or its agents, including a
person working in or responsible for the operation of
a foster, receiving, or detention home, or children's
institution, is not liable for the acts of
unemancipated minors in its charge or custody. A
state agency or an agent of a state agency, including
a nonprofit corporation that designates shelters for
runaways under AS 47.10.392 - 47.10.399 and employees
of or volunteers with that corporation, is not liable
for the acts of a minor sheltered in a shelter for
runaways, as defined in AS 47.10.399.
Number 2850
REPRESENTATIVE LYNN, notwithstanding the aforementioned statute,
asked why the state would not be responsible, if it has claimed
it can better care for a child. He stated that it did not make
sense, because the state is then acting [in loco parentis].
Number 2837
REPRESENTATIVE GRUENBERG stated that that was a decision that a
previous legislature made, and if the current legislature would
like to revisit the issue, it could consider a "partial
appellate."
CHAIR WEYHRAUCH noted that that addresses only the cap, not the
liability of the state in [subsection] (b), which is another
fundamental policy issue that would have to be taken up by the
committee in a separate bill or as an amendment to HB 18.
REPRESENTATIVE LYNN interjected, "I want to make that
observation."
Number 2811
REPRESENTATIVE MEYER concurred that the purpose of the bill is
solely to change the cap. He said that there are other
complications involved that, perhaps, should be looked at. He
noted that Representative Lynn has a bill similar to HB 18 and,
after speaking to Representative Meyer, agreed jointly that HB
18 would be "the vehicle on the house side." Senator Fred Dyson
also has a similar bill, which will be [heard by the Senate.]
Number 2783
CHAIR WEYHRAUCH referred to a page included in the committee
packet, and noted that Florida allows what he said looks like a
case-by-case review of damage claims, with some absolution of
parents or guardians, depending on the circumstances. He said,
"We all know about the child, even with good parents, who cannot
be controlled at all." He said it appeared that Florida might
allow an exception to making the parent responsible for that
child's damages and, instead, "set it on the child where it
belongs - a tougher love approach."
REPRESENTATIVE MEYER said that "we" are open to suggestions to
improve the existing law.
CHAIR WEYHRAUCH stated that another concern is that a cap may be
necessary in order to protect a destitute family from being
bankrupted by the actions of a child.
REPRESENTATIVE MEYER, in response to a query by Chair Weyhrauch,
reiterated that the cap of $10,000 was set in 1995. He said
that he thinks some states may have "an automatic inflation
kicker" that allows the cap to be raised periodically to match
inflation. He suggested that that plan might help the
legislature to avoid having to address this issue every five
years.
CHAIR WEYHRAUCH referred to the article included in the
committee packet about the two teenagers who ran amuck on a
tractor through a school. He said, "It's the worst-case
scenario you're playing to in this kind of thing."
Number 2750
REPRESENTATIVE BERKOWITZ referred to existing statutory language
[AS 34.50.020(a)], which says in part [beginning at page 1, line
12, of the bill]:
However, for purposes of this subsection, recovery in
damages shall be apportioned by the court between the
parents or between the parents and legal guardian, or
both, without regard to legal custody but with due
consideration for the actual care and custody of the
minor provided by the parents or legal guardian.
REPRESENTATIVE BERKOWITZ said that there is no mention of
accountability or responsibility "for the juvenile." He asked
if the juvenile is excluded from responsibility.
REPRESENTATIVE MEYER stated that it is his understanding that it
is up to the courts and sometimes [the courts] do hold the
juveniles responsible.
Number 2645
REPRESENTATIVE GRUENBERG said, "No, the juvenile is responsible.
This is only in addition to the juvenile. That doesn't permit
double recovery."
REPRESENTATIVE BERKOWITZ asked where in statute that is written.
REPRESENTATIVE GRUENBERG responded that he did not have the
title of the statute, but that it deals with "people other than
the juvenile." He said, "The juvenile is [as] responsible as
any other tort-feasor. This allows responsibility to be
assessed against a third party - the parent. That's the whole
purpose of the statute."
Number 2583
VICKI HORODYSKI testified as follows:
At first glance, this bill looks like a bill which
will force parents to provide adequate supervision and
guidance for their children. However, there's another
side to this issue, which does not immediately come to
mind. Why would any family or couple willingly risk
their financial security by taking a child or sibling
group [who may be involved in] high-risk juvenile
delinquency, including property damage.
Many families do accept such children into their homes
through guardianship and adoption. These families
work diligently towards helping their children grow
into the most successful, responsible adults that they
can be. That journey is not necessarily smooth.
I'm a foster and adoptive parent who takes only
children with fetal alcohol spectrum disorders. I
volunteer as a coordinator of our local FAS [fetal
alcohol syndrome] parent support group, and, as a
surrogate parent, I am an educational advocate for
children in state custody. I'm also a parent
navigator with the Fairbanks FAS diagnostic team.
This puts me in contact with many children and
families who are facing a variety of situations.
In particular, I am working with an adolescent who is
being considered for adoption by a very knowledgeable,
competent family who wants to add one more child to
their family of seven, of which three have fetal
alcohol syndrome.
My fear is that this family may reconsider their
decision to add one more high-risk child to their
family. As an adolescent, it's a miracle that a
family is even considering adopting him. If they
change their minds because of financial risk to their
family, there will be no other opportunity for him.
Number 2471
CHAIR WEYHRAUCH asked Ms. Horodyski if people who take in an FAS
child or serve as foster parents have a contractual arrangement
with the agency through which they get the child to allow them
"indemnification for damages."
MS. HORODYSKI answered, "I know we're not responsible. I don't
recall signing that type of a contract."
CHAIR WEYHRAUCH posed the following question:
Would that give you some comfort, if you were taking
these high risk kids and knowing that they're going to
act outside the bounds of what you may or may not
consider normal or acceptable behavior, in some case,
where the state, or the agency ... through which you
obtained the child would indemnify and defend you, in
exchange for you taking that?
CHAIR WEYHRAUCH clarified that his question applied to Ms.
Horodyski as either a foster parent or an adoptive parent.
MS. HORODYSKI answered, "As an adoptive parent, yes." She
clarified that it is already the case that a foster parent is
not responsible. She added, "When you're talking about really
high risk kids, a lot of times they've already done a lot of
damage, and families try to help them make changes so that that
doesn't continue."
Number 2384
REPRESENTATIVE GRUENBERG stated that he has a conflict of
interest on [HB 18] and asked that he be allowed to abstain from
voting on it.
REPRESENTATIVE BERKOWITZ objected.
CHAIR WEYHRAUCH asked Representative Gruenberg to "continue to
participate in this discussion."
REPRESENTATIVE GRUENBERG said that he thinks that it is hard to
place some children. Throwing up roadblocks or requiring
indemnification would make it impossible to place them, as [Ms.
Horodyski] stated.
CHAIR WEYHRAUCH asked Ms. Horodyski, if the state would
indemnify her for damage caused by the child, would that give
her comfort?
MS. HORODYSKI said yes. In response to a follow-up question by
Chair Weyhrauch, she concurred that, if there was a policy
decision to indemnify her for the acts of "these kids," it would
"smooth the way for you to want to enter into these
arrangements."
REPRESENTATIVE GRUENBERG clarified, "I meant the opposite. I
mean, certainly, they'd like to be let off the hook. I don't
know that any state would want to be on the hook for (indisc.)."
Number 2261
REPRESENTATIVE SEATON asked, "Are we going to find that we are
actually stimulating emancipation of minors. Because that's
what it sounds like, that as soon as they're emancipated, you're
out from under this hook."
Number 2170
REPRESENTATIVE LYNN commended [Ms. Horodyski] and others like
her who take in children with fetal alcohol syndrome and high-
risk children into their homes.
CARL ROSE, Executive Director, Association of Alaska School
Boards (AASB), stated that [AASB] would like to see the cap
removed. He offered the following anecdote: A juvenile broke
into a "pop" machine and, to remove the evidence, he set the
school on fire. That [took place at] Mountain Village [School]
and the damage totaled $7 million. Mr. Rose told the committee
that, at the time, he was employed as a president of an
insurance company that was insuring schools. He said, "That
entire loss was picked up with a $10,000 deductible."
MR. ROSE stated that the school districts are the
indemnification; they take insurance, pay the deductible, and
assume the cost. He said that there is no remuneration - that
money comes from instructional dollars. In the worst-case
scenario, he said, the numbers could be alarming. He mentioned
a resolution adopted by AASB, which he said he would make
available to Representative Meyer.
MR. ROSE mentioned policy implications. He said, "When we start
to look at the unintended consequence of simply removing the
cap, that becomes a problem." He prevailed upon the committee
and the legislature to "take a look at what we're dealing with
here," for example, vandalism that can be demoralizing and puts
the tax payers at risk of picking up the bill. In the
previously mentioned case of the Mountain Village School, a $7
million loss affected all the members of the [insurance] pool,
by increasing their rates for insurance dramatically.
MR. ROSE concluded as follows:
To be able to take advantage of the uniqueness of the
circumstance and to not create unintended
consequences, that's an area of policy that you folks
will have to deal with. Our interest is simply to
remove the $10,000 cap, because we think it's
inadequate. We'd like to recover the actual cost, and
somewhere in between there there's a solution.
CHAIR WEYHRAUCH told Mr. Rose that it would be very useful to
receive the resolution and any other supporting information from
his agency.
Number 1955
REPRESENTATIVE BERKOWITZ told Mr. Rose that he raised an
interesting point. The proposed legislation is an effort to
solve a school district problem through one approach. He noted
that Mr. Rose had raised the issue of insurance and insurance
pooling. He asked if there is another way of, perhaps,
combining different approaches to solve the problem. He asked
if something could be done with insurance pooling.
MR. ROSE replied that that might be a possibility; however, he
noted that there are only two active insurance pools in the
state: the Alaska Municipal League Joint Insurance Association
(AML/JIA), and the Alaska Public Entity Insurance Company
(APEI). He mentioned the commercial market. He said that "we"
are getting into a highly competitive area and there will be
some "proprietary interest." He questioned if that's where [the
legislature] wants to go in regard to legislation, but said he
thinks it's an issue that needs to be addressed. He stated
that, in the extreme cases, there are costs involved "that are
assumed, not only by tax payers, but by the actual consumers of
insurance across the state."
MR. ROSE said, "Vandalism can become a very expensive thing. If
you're just talking about graffiti, it's still expensive. But
if you're talking about major losses that result from this, that
takes us into a whole 'nother arena." He reiterated that [AASB]
would like to see the cap lifted, but does not want to see any
unintended consequences.
REPRESENTATIVE BERKOWITZ noted that conflict exists, on the one
hand, regarding the previously stated examples of "commercial
interest with insurance." Furthermore, he stated, there are
constitutional questions "on the other side," in regard to
requiring accountability for the actions of a third party for
unspecified conduct. He suggested that perhaps there might be
an option to explore, a middle ground, third option.
Number 1830
REPRESENTATIVE SEATON referred to the $7 million in damages at
the Mountain Village School. He asked if that money
realistically could have been recovered from the parents of the
child responsible.
MR. ROSE answered that his recollection is that that child was
taken away by juvenile services. He stated that he does not
think there was any attempt to get any remuneration, because the
loss was so extreme. He said he thinks the case has been raised
that when people don't have the money, there is no recourse
other than to put them in debt for the rest of their lives. He
stated that AASB's issue is that, when there is damage done to
schools, it wants to be able to cover some of those costs when
available. He mentioned "no-fault" insurance and car insurance.
He posed, "When people who are not insured get in an accident,
what recourse do you have if they have nothing?"
Number 1753
REPRESENTATIVE GRUENBERG stated that people can purchase
"uninsured" or "underinsured" motorist coverage. He asked if
school districts are insured "for this type of loss."
MR. ROSE answered yes; it is required by law that school
districts carry insurance. The limits of coverage and the
actual premiums that are paid are contingent on deductibles.
Some school districts choose to take a large deductible to keep
rates down, while others take a smaller deductible. He said,
"You need a case, maybe even the deductible could be -- that
might be what you go after." He clarified that all school
districts carry both property and liability insurance.
REPRESENTATIVE GRUENBERG noted that parents hold policies if
they can afford to. He indicated insurance rates "going up."
He said that the question is, "Whose pool do you want to have
going up?" The only other issue, he stated, is the amount of
the deductible. He noted that, based upon the previously stated
testimony of Mr. Rose, there was no attempt to "go after" the
$10,000 [deductible].
MR. ROSE responded that it appeared in that case that there was
no money to be recovered.
Number 1635
REPRESENTATIVE BERKOWITZ focused on the "school district
component," because he said that it is "the anecdote that's
driving this legislation, which is always problematic." He
asked how many times the cap has been a barrier to recovery.
Specifically, he asked how many times damages have fallen below
or above $10,000. He wondered if it would be possible just to
raise the limit somewhat, instead of having no cap at all.
MR. ROSE said that he did not have that information, but could
try to get it.
CHAIR WEYHRAUCH said that "we'll" work with the sponsor, as
well, to address some of these questions.
[HB 18 was heard and held.]
HB 46-PRIMARY ELECTION BALLOTS
Number 1551
CHAIR WEYHRAUCH announced that the last order of business was
HOUSE BILL NO. 46, "An Act relating to ballots."
Number 1520
REPRESENTATIVE MIKE HAWKER, Alaska State Legislature, sponsor of
HB 46, explained that in the [Twenty-Second] Legislative session
some changes were made to the state's structure of conducting
primary elections, which limited the voting ability of people by
requiring them to select a ballot from one of the established
political parties in the state. He said that it was not
foreseen that there could be items on the ballot that don't
involve voting for candidates - ballot propositions, for
example. Representative Hawker told the House State Affairs
Standing Committee that his constituents have expressed concern
regarding being forced to choose a political party ballot when
doing something as simple as choosing to vote only on the
issues, for example. He stated that he felt the situation
needed to be remedied as a matter of equity. He mentioned a
committee substitute that had been offered to the committee.
Number 1425
REPRESENTATIVE DAHLSTROM moved to adopt the proposed committee
substitute (CS) for HB 46 [Version 23-LS0298\D, Kurtz, 2/11/03].
There being no objection, Version D was before the committee.
Number 1398
REPRESENTATIVE HAWKER stated that the purpose of [Version D] is
to clarify the intent of the legislation. Specifically, the
[proposed legislation] requires the Division of Elections,
during the preparation of ballots for primary elections, to
prepare a separate ballot that only contains the propositions
and issues to be voted on. He clarified that that would not
change the already existing ballots containing the party
candidates and issues. Persons choosing to vote in the primary
election may choose only one ballot, which would include the
nonparty issues ballot [if this legislation is passed], he said.
Representative Hawker stated his belief that this [proposed
legislation] levels the playing field and encourages the right
and responsibility of all people to vote in the State of Alaska.
Number 1292
REPRESENTATIVE GRUENBERG said he thinks the bill is a good one.
He stated his belief that with the current scrutiny of the
[state's] budget, it is very important for the fiscal notes to
be accurate. He told the sponsor that he thinks that it is
inconceivable that [the proposed legislation] could have a zero
fiscal note, because [the Division of Elections] will have to
print an extra ballot.
REPRESENTATIVE GRUENBERG opined that the question to be asked is
if there is additional cost to the division, regardless of
whether the division can absorb it.
Number 1116
REPRESENTATIVE HAWKER responded that he followed the language
provided by the Division of Elections during the preparation of
the fiscal note. He stated his understanding, regarding the
process of preparing ballots for election, that the division
would not incur any incremental cost in excess of what it
currently spends in preparation for elections.
REPRESENTATIVE GRUENBERG noted that the House State Affairs
Standing Committee is the committee of first referral and the
[House Finance Committee] is "normally" the committee of second
referral. He added, "And the precedent that we set will come
around to haunt us."
Number 0978
REPRESENTATIVE SEATON asked if "these ballots" are generated on
a contract and asked if [the Division of Elections] could
identify what the differential would be in the bid with multiple
ballots.
REPRESENTATIVE HAWKER replied that he did not know the answer.
He said he believes someone from the Division of Elections was
available to address that line of questioning.
Number 0860
LAURA GLAISER, Director, Division of Elections, Office of the
Lieutenant Governor, answered Representative Gruenberg's query
as follows:
That appropriation was for a six-ballot primary, and
this year we've sent out notifications to the
Republican Moderates and to the Green Party that they
are below the 3 percent, so that the likelihood of a
six-ballot primary next time is unlikely. So we
thought it was justified to say that we can absorb
those costs, because we've been given an appropriation
that allows for six ballots, which really would be a
seventh ballot, which is the way it was referred to
previously.
Number 0795
REPRESENTATIVE GRUENBERG referred to Sonneman v. State, a case
regarding the constitutionality of the rolling ballot, where
"the order of the people would vary, so the person at the top of
the ballot would not continue to occupy that advantage." He
reported that the cost to do one extra ballot statewide - in
order to roll it - would have been $50,000. He continued as
follows:
That testimony impelled the [Alaska] Supreme Court to
uphold the constitutionality of no rolling ballot. It
was absolutely outcome-determinative. And a small
fiscal note like this can have tremendous,
unanticipated consequences.
Number 0688
REPRESENTATIVE GRUENBERG referring to the previous testimony of
Ms. Glaiser, stated the following:
And here, what you're saying Ms. Glaiser is that
because a couple of minor parties are no longer on the
ballot, there will be a cost savings. So, in fact,
there would be a lapse, or additional money coming
back to the state from this one little item, because
you're not going to have to have as many ballots
printed. If this bill passes, you'll still be able to
absorb it, but the money coming back to the general
fund will be less. So there really is a cost, it's
just that the savings will be less. And for ... all
of these reasons I think that it's really important
that we have accurate fiscal notes.
Number 0655
REPRESENTATIVE BERKOWITZ stated that he wants to echo what
Representative Gruenberg said. In this case, the amount of
money is small, but there could be other instances involving
substantial amounts of money. He noted that he believes there
was an overestimation of $12 million this year for pupil
allocation, for example. He said that that money ought to come
back to the general fund, [the legislature] ought to know about
it, and, if it is to be reappropriated, it ought to be listed on
the fiscal notes. He said, "It's absolutely imperative for
truth and honesty in budgeting that these numbers be available."
Number 0581
SEAN HALLORAN testified that he is not [affiliated] with any
group, including political parties, which is why he is
testifying and also why he is suing the Division of Elections
over the "current scheme that's in place right now." He stated
his belief that the current "scheme," which requires voters to
choose a political party in order to be allowed to vote on an
initiative, referendum, or any other ballot measure on a primary
election day, is unconstitutional. He opined that [the proposed
legislation] is one of many "fixes" that could be implemented.
All the "fixes" have one thing in common, he said, which is to
make a state ballot, as opposed to a political party ballot,
available to voters.
MR. HALLORAN explained that political parties are private
organizations that have a right to exclude "under the law" any
voters who are not members of that party. Currently, if each of
the political parties closed its primary [election ballot], then
no one who wasn't a member of a political party would be able to
vote. He suggested that if [the legislature] is worried about
the cost of another ballot, for example, it could "just have
initiatives decided at the general election, instead of on
primary election day, when [there is] a statewide ballot with
state issues and state races being conducted."
MR. HALLORAN said that the "fix" will have to be done sooner or
later, either voluntarily [through legislation], or when the
court declares the current system unconstitutional. He told the
committee that, "on the last election day - last summer," he got
a restraining order from the court which allowed him to vote
without expressing a preference for a political party. He said
he received hundreds of phone calls within a couple of weeks
after that election, from people congratulating him [for his
action] and saying that they wished they had "done something
similar themselves."
Number 0270
REPRESENTATIVE BERKOWITZ noted his own following two "fixes" to
the problem: First, the elimination of primaries altogether,
which would amount to a considerable savings to the state; and
second, the elimination of state recognition for political
party. He reiterated Mr. Halloran's previous statement that
political parties are private organizations, and he said that
state subsidization of them is "somewhat questionable" in his
mind, as well.
Number 0209
MR. HALLORAN stated his opinion that both of [Representative
Berkowitz's] alternatives would be perfectly acceptable.
Number 0177
REPRESENTATIVE BERKOWITZ responded as follows: "It always
strikes me as peculiar that the state keeps track of which
political party people have joined. I think it's a fairly
intrusive thing. They don't keep track of people's religion,
they don't keep track of people's gender, and it seems to me
political affiliation is a first amendment association right."
MR. HALLORAN said he agrees with Representative Berkowitz.
Number 0072
REPRESENTATIVE LYNN said he supports the bill.
REPRESENTATIVE HOLM moved to report the proposed committee
substitute for HB 46, Version 23-LS0298\D, Kurtz, 2/11/03, out
of committee with individual recommendations and the
accompanying fiscal notes. [No objection was stated and CSHB
46(STA) was moved from the House State Affairs Standing
Committee.]
TAPE 03-12, SIDE A
Number 0014
[The following testimony regarding HB 46 was allowed by Chair
Weyhrauch after bill action was taken.]
JENNIFER RUDINGER, Executive Director, Alaska Civil Liberties
Union, spoke on behalf of that organization in support of the
committee substitute for HB 46. She told the House State
Affairs Standing Committee that ACLU is a nonpartisan, nonprofit
organization, with over a thousand members in the state. Its
mission is to defend the Bill of Rights and the guarantees of
individual liberties that are found in the Alaska constitution.
Ms. Rudinger said people contacted the ACLU in late July and
early August [2002] regarding the issue previously discussed by
Mr. Halloran. She said, "We looked into their complaints. We
concluded they had a great case. Due to time constraints, we
assured them that we would work for a legislative fix, and we
thought this would be a no-brainer." She stated that "their
first amendment rights to association and speech, and also their
Alaska constitutional right to privacy was being infringed by
the current system."
[CSHB 46(STA) was reported from committee.]
ADJOURNMENT
Number 0160
There being no further business before the committee, the House
State Affairs Standing Committee meeting was adjourned at 9:42
a.m.
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