Legislature(2001 - 2002)
03/13/2001 10:02 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
March 13, 2001
10:02 AM
TAPES
SFC-01 # 36, Side A
SFC 01 # 36, Side B
CALL TO ORDER
Co-Chair Dave Donley convened the meeting at approximately 10:02
AM.
PRESENT
Senator Dave Donley, Co-Chair
Senator Pete Kelly, Co-Chair
Senator Jerry Ward, Vice Chair
Senator Lyda Green
Senator Gary Wilken
Senator Alan Austerman
Senator Lyman Hoffman
Senator Donald Olson
Senator Loren Leman
Also Attending: SENATOR RANDY PHILLIPS; SENATOR GENE THERRIAULT;
DARWIN PETERSON, staff to Senator Torgerson; NEIL SLOTNIC, Deputy
Commissioner, Department of Revenue; LEE LIVERMORE, Chief
Investment Officer, Department of Revenue, Treasury Division,
Department of Revenue;
Attending via Teleconference: From Anchorage: MARK MYERS,
Director, Division of Oil and Gas; JIM STOUFFER; DAN SULLIVAN,
Development Director, Arctic Winter Games Team Alaska.
SUMMARY INFORMATION
SB 77-NET PROFIT SHARE UNDER/OVERPAYMENTS
The Committee heard from the sponsor and the Department of Natural
Resources. The bill was reported from Committee.
SB 65-PAY EQUITY FOR STATE EMPLOYEES
The Committee heard from the sponsor. A committee substitute was
adopted and three amendments were considered and adopted. The bill
was reported from Committee.
SB 58-ADD PHYSICIAN ASST TO STATE MEDICAL BOARD
The Committee heard from the sponsor and moved the bill from
Committee.
SB 93-ARCTIC WINTER GAMES TEAM ALASKA TRUST
The Committee heard from the sponsor, the Special Olympics World
Winter Games and the Department of Revenue. The bill was held in
Committee.
SB 102-SOCIAL SECURITY # & DRIVER'S LICENSES
The Committee heard from the sponsor, considered and adopted an
amendment and reported the bill from Committee.
SENATE BILL NO. 77
"An Act repealing the exception that applies to collection and
payment of interest of $150 or less on royalty or net profit
share underpayments and overpayments; and providing for an
effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
DARWIN PETERSON, staff to Senator Torgerson, sponsor of the bill,
read the sponsor statement into the record as follows.
In 1998, the legislature enacted AS 38.05.135 (g), exempting
the Department of Natural Resources from calculating interest
on small over or under payments of royalty if the interest is
$150 or less. The cost of calculating these small
over/underpayments was more than the interest received or
credit applied. Prior to 1998, Department of Natural Resources
was calculating these small payments manually. For the 12
months prior to October 31, 2000, the State processed 1716
royalty filings where interest amounts were between a negative
$150 and a positive $150. The net amount of these
under/overpayments was a positive $4,096.
The effort of calculating, processing and tracking interest
for small under/overpayments was not cost effective for the
oil companies or the State. With the advent of the State's new
Oil and Gas Royalty Accounting System, all interest is
calculated electronically. Also, most royalty payers are using
mainframe computer systems and sending their royalty reports
electronically. The failure to repeal AS 38.05.135 (g) would
require the Department and royalty payers to reprogram their
computer systems to not compute under or overpayments of less
than $150.
The sophisticated computer systems used by the royalty payers
and the State are now able to quickly compute the interest
owed on even the smallest under or overpayment. All the
royalty payments are automatically summed together and one
wire transfer is used for payment. The repeal of AS 38.05.135
(g) will solve the problem of the administrative burden on the
part of the royalty payers and the State to manually track
very small amounts of interest. It is an unnecessary expense
to reprogram computer systems to handle separate interest
calculations for these small interest amounts, especially when
a much easier option is available.
Senator Olson requested the amount of overpayments and
underpayments.
Mr. Peterson replied that the amount of money in question is
minimal. He detailed that for the 12 months prior to October 31,
2000, the state processed 1,716 royalty filings where the interest
amounts were between a negative $150 and a positive $150. He stated
that the net amount results in a positive $4,096 for the state.
MARK MYERS, Director, Division of Oil and Gas, testified via
teleconference from Anchorage in strong support of the legislation.
He noted that the existing statute has been made obsolete by the
department's modernized and automated royalty accounting system. He
stated that adopting of this legislation would result in a more
accurate accounting procedure and would simply practices for both
the state and the producers. He surmised that the producers also
support the bill. He pointed out that no opposition had been raised
to the bill and that it has no fiscal impact on the state or the
producers.
JIM STOUFFER testified via teleconference from Anchorage to
reiterate Mr. Meyer's statements.
Co-Chair Kelly chaired the remainder of the meeting.
Co-Chair Donley offered a motion to report SB 77, 22-LS0519\A, from
Committee with accompanying zero fiscal note from the Department of
Natural Resources, Oil and Gas Development Budget Request Item
(BRU). There was no objection and the bill MOVED from Committee.
AT EASE 10:07 AM / 10:07 AM
SENATE BILL NO. 65
"An Act requiring a study to determine if gender is a
determinant in state employee compensation."
[Note: A committee substitute was distributed to the Committee. The
two-page committee substitute inadvertently included the first page
of 22-LS0060\J and the second page of 22-LS0060\L. All references
to the version "J" committee substitute during the hearing pertain
to this J/L combination. A copy of this is on file.]
This was the second hearing for this bill in the Senate Finance
Committee.
Co-Chair Donley, sponsor of the bill, spoke to a proposed committee
substitute that develops additional background information to
clarify that the intent of the legislation is to ensure that the
state is in compliance with current federal and state laws
requiring equal pay for equal work.
Co-Chair Donley called members' attention to a memorandum from his
office detailing the requirements of the study. He noted this
includes defining the differences between equal pay for same work,
equal pay for comparable work, and equal pay for equal work. He
also referenced a section analysis for the committee substitute.
[Copies on file.]
Co-Chair Donley moved for adoption of CS SB 65, 22-LS0060\J, 3\5\01
[See note above.] It was adopted without objection.
Co-Chair Donley continued addressing the committee substitute. He
described the difference between equal pay for equal work and equal
pay for comparable work. He defined this as making sure that
identical jobs as well as jobs that are substantially equal in
terms of composite skill, effort, responsibility, work conditions
and other material aspects, are paid equally and not paid different
amounts based upon domination by a particular gender.
Co-Chair Donley stressed that Alaska has a superior classification
method compared to most states, and that he believed no significant
discrimination would be found. However, he emphasized that until a
study is done, no one could be absolutely sure. He noted earlier
litigation over nursing classifications, which he said have been
addressed and the need to ensure there are no other instances.
He understood the concerns raised at the previous hearing regarding
how complicated a comparable work-study could be. In recognition of
this, he said he endeavored to clarify the study to ensure the
study addresses equal pay for equal work rather than comparable
work.
Co-Chair Kelly stated that the nurses versus physician assistants
issue is a good example of equal work and asked Co-Chair Donley to
elaborate.
Co-Chair Donley detailed that the Human Rights Commission found
that the classification of nurses was gender dominated by females
and the classification of physician assistants was gender dominated
by males, but that both were performing the same work and should
have been paid equally. However, he pointed out that the physician
assistants were paid more than the nurses. He continued that the
Commission's findings were appealed up to the Supreme Court and
that the court found that there were some duties performed by the
physician assistants that were different from those performed by
the nurses. Therefore, the court determined that there was no
improper discrimination under the equal pay for equal work laws.
Co-Chair Donley stated that as a result of this case, adjustments
have been made to eliminate the perceived problem. He gave a
hypothetical example of two employees doing the same job, but one
is classified as a janitor and the other as a maintenance
technician, and receives higher pay. In this instance, he said, if
most of the janitors are women and most of the maintenance
technicians are men, the equal pay for equal work rules are
violated.
Senator Olson clarified that the nurses in question were actually
nurse practitioners.
Co-Chair Donley was unsure, noting that the case was handled ten
years prior and was resolved by the Supreme Court, which found in
favor of the state. He spoke to his knowledge of the nursing
profession, citing that his mother was a nurse. However, he
maintained that he found the different classifications of nursing
confusing because of the different educational requirements for
each classification.
Senator Leman appreciated Co-Chair Donley's efforts to clarify the
issue. Senator Leman stated he had been concerned that attempting
to determine the worth of a worker, "against the marketplace" was
unwise. However, he stated that he has always supported equal pay
for equal work. He requested the bill be held in Committee to allow
him to further "tighten" the language.
AT EASE 10:15 AM / 10:20 AM
Amendment #1: This amendment makes a title change to the committee
substitute as follows.
Page 1, lines 1 and 2:
Delete:
An Act requiring a study to determine if gender is a
determinant in state employee compensation.
Insert:
An Act requiring a study regarding equal pay for equal work.
Co-Chair Donley moved for adoption.
Senator Hoffman asked if the intent is to continue to limit the
study to state employees.
Co-Chair Donley replied that is the intent, noting that language
within the bill provides such.
Senator Hoffman pointed out that the title would leave open the
possibility to expand the study while the House of Representatives
considered the bill.
Co-Chair Donley AMENDED his motion as follows.
Page 1, lines 1 and 2:
Delete:
An Act requiring a study to determine if gender is a
determinant in state employee compensation.
Insert:
An Act requiring a study regarding equal pay for equal work
for certain state employees.
The amendment was ADOPTED without objection.
Amendment #2: This amendment inserts, "in compliance with equal pay
for equal work laws" following "employees" on page 2, line 11 of
the committee substitute. The amended language reads as follows.
GENDER PAY EQUITY SURVEY. The Department of
Administration shall conduct a study to determine whether
gender is a determinant in setting compensation for state
employees in compliance with equal pay for equal work laws…
[See above note regarding the committee substitute. This change
impacts language contained in the "L" version, page two of which
was distributed along with page one of version "J". This
combination is referred to in Committee action as version "J".]
Co-Chair Donley moved for adoption.
AT EASE 10:23 AM / 10:24 AM
The amendment was adopted without objection.
Co-Chair Donley offered a motion to report from Committee, CS SB
65, 1-LS0060\J, as amended with accompanying Department of
Administration, Centralized Administrative Services BRU fiscal note
for $50,000. [See above note.] There was no objection and the bill
MOVED from Committee.
SENATE BILL NO. 58
"An Act relating to the membership and quorum requirements of
the State Medical Board."
This was the first hearing for this bill in the Senate Finance
Committee.
Senator Olson, sponsor of the bill, stated that this legislation
adds a physician assistant (PA) to the membership to the State
Medical Board. He noted that currently, there are seven members on
the Board, but that only physicians and public members with no
financial connection to the health care industry may serve in these
positions. He relayed that there are 250 physician assistants in
the state providing a wide variety of medical services in Alaska.
He stressed that the PAs are an important part of the Alaskan
health care delivery system and on average, account for 50,000
patient-provider contacts per month. He added that in rural
settings, they are often the only health care practitioner
available to respond to emergencies and life-threatening
situations.
Senator Olson informed the Committee that the State Medical Board
is responsible for administering the certification examination for
physician assistants. In addition to setting licensing
qualification, he noted the Board determines the scope and nature
of the medical services that a PA is authorized to perform. He
continued that the Board also sets the supervision requirements of
the supervising physician. He stressed that the effectiveness of
the PA is dependent upon the working relationship with the
supervising physician.
Senator Olson summarized that because of the aforementioned
statements a PA position should be added to the Board's membership.
He surmised that this change would increase the Board's
effectiveness in maintaining the quality of health care delivery.
Co-Chair Kelly noted that the new membership would be an even
number of members. He referred to testimony given in the Senate
Labor and Commerce Committee and asked Senator Olson to relay the
outcome of the discussion.
Senator Olson responded that the additional seat would increase the
number of members on the Board to eight. As a result, he stated the
quorum would increase from four to five members. He predicted that
this would cause no significant disruption to the process, given
that the meetings are often one member short due to conflicting
obligations. He noted that tie votes would be rare since actual
meeting attendance would often be less than the full eight-person
membership.
Co-Chair Donley offered a motion to report from Committee, SB 58,
22-LS0452\C with accompanying $3,000 fiscal note from the
Department of Community and Economic Development, Occupational
Licensing BRU. The bill MOVED from Committee with no objection.
AT EASE 10:30 AM / 10:32 AM
SENATE BILL NO. 93
"An Act relating to the Arctic Winter Games Team Alaska trust;
and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Senator Phillips, sponsor, noted that the Department of Revenue had
technical suggestions. He spoke to the bill, giving the 30-year
history of the Arctic Winter Games, established by the
Commissioners of the Yukon and Northwest Territories of Canada, and
Governor Hickel of Alaska.
Senator Phillips shared that funding for Alaska's participation in
the Games must be secured annually, and that there have sometimes
been difficulties. He said he therefore introduced this
legislation, which establishes a trust similar to the Alaska
Children's Fund and would be called The Arctic Winter Games Team
Alaska endowment. He assured that once the endowment is
established, there would be no further annual requests for funding
the Games. He explained that the interest from the endowment would
fund Team Alaska and the Games themselves when hosted in Alaska. He
noted that the Games are next scheduled for Alaska in 2006.
DAN SULLIVAN, Development Director, Arctic Winter Games Team Alaska
testified via teleconference from Anchorage about his involvement,
both as an athlete and as an organizer and board member. He relayed
past difficulties in receiving funding. He stated that the goal of
this legislation is to provide a manner in which the group could
remain viable long into the future without continuous state
funding. He gave the history and participation of Alaska in the
games. He thought that establishing the trust account, similar to
the Alaska Children's Fund, would benefit the Games.
Mr. Sullivan spoke to the importance of preserving the cultural
aspect of the many sports included in the games. He stated that
this one-time investment would allow state funding in the future to
be allocated to other uses.
Mr. Sullivan asserted that sports are an effective deterrent
against teen smoking. He suggested that the legislature consider
allocating approximately one-percent of the tobacco settlement
funds to the Games, which keep young people involved in athletics.
He also noted that the athletes represent Alaska and the entire
United States as well, as Alaska is the only state that
participates. Unlike other countries, he stressed that Alaska's
athletes themselves pay approximately one-third of the cost of
participating in the bi-annual games. He noted that each athlete
would be charged approximately $1000 to participate in the upcoming
Games held in Greenland if the current funding level remains
unchanged. He surmised that many rural athletes would be unable to
participate due to the cost.
Senator Leman referred the $5 million appropriation from the state.
However, he noted large financial participation from business and
individuals for the Special Olympic Games. He asked if the witness
thought the Arctic Winter Games could generate similar enthusiasm
and if the $5 million could come from private and corporate
donations.
Mr. Sullivan replied that while there would be some private input,
it would not equal the amount obtained by the Special Olympics
World Games, held in Alaska during the current year. This he said
is due to the lower profile of the Arctic Winter Games. He pointed
out that the Special Olympics involved 80 countries, obtained
approximately $8 million in federal funding, and had large exposure
from US Senator Ted Stevens. He qualified that when the Arctic
Winter Games are held in Alaska, their profile does increase, but
when the Games are held elsewhere, corporations do not see the
publicity benefits.
Senator Olson asked the sponsor how many athletes and personnel are
involved in the Games.
Senator Phillips replied that approximately 2,000 athletes and
1,500 to 2,000 personnel are expected to participate in the
upcoming Greenland Games. He noted that Alaska has the largest
contingency, with 328 athletes. He stressed that the Games are the
2nd largest winter sporting event in the world.
Mr. Sullivan reiterated that Alaska has approximately 330 athletes,
plus 30 to 40 coaches and support staff, from 40 to 50 communities,
travel to the Games.
Senator Phillips added that the prior Games, held in Eagle River,
Alaska cost approximately $2 million of which 60 percent were
privately raised funds.
Mr. Sullivan affirmed.
Senator Phillips noted that when the Games were held in Chugiak in
1996, the Municipality of Anchorage donation of $100,000 was paid
back.
Senator Austerman asked for an explanation of how the trust would
operate. He wanted assurance that only the interest earnings of the
trust would be used. He also wanted to know when and where the $5
million is accounted since it is not included in the fiscal note.
LEE LIVERMORE, Chief Investment Officer, Department of Revenue,
Treasury Division, Department of Revenue, explained that the trust
is set up with a $5 million endowment. He said that the funds would
be invested with long-term goals. He clarified that the interest
payments are not actually used to annually fund the Games, but
rather the market value is calculated, and the trust has the
ability to pay out up to five percent of that value each year. He
noted that the trust would hopefully grow enough to allow a larger
pay out in the years the Games are held in Alaska.
Mr. Livermore described two ways to handle the trust, one that
focuses on short-term goals, such as income. However, he
recommended that because of the long-term needs of the Games, the
trust should be managed so that the market value grows. He
explained that by establishing this trust to focus on market value,
more funds would be invested in the stock market and with a focus
to appreciate over time. This, he said, protects the trust from
inflation as well as providing an annual appropriation.
Ms. Livermore expressed that the funds would be invested similarly
to how pension funds are invested. He stated that if the goal were
to achieve a 5.25 percent real rate of return, the same as the
pension fund, the trust would invest 50 percent in US stock, 20
percent in international stock, with the remainder invested in the
bond market.
Senator Austerman referred to a Department of Revenue spreadsheet
with an assumed 8.495 percent each year in total returns, with five
percent used to fund the Games. [Copy on file.] He asked if the
projected earnings were based on an average rate of return and what
would happen if the annual rate dropped below 8.495 percent.
Mr. Livermore replied that the figures are based on a three-year
average on the market value of the fund. He explained that this
takes into account volatility in the return, particularly in the
stock market. He pointed out that while the previous year was poor,
it followed five high years and therefore the average was not
affected as dramatically.
Co-Chair Kelly asked if the proposed changes from the Department of
Revenue were included in the committee substitute.
Senator Phillips replied they were not.
Co-Chair Kelly requested that a new committee substitute be drafted
to address the changes.
Senator Austerman repeated his question as to the source and date
of the $5 million appropriation.
Senator Phillips responded that a special appropriation would be
necessary to establish the fund. He reiterated that this trust
would employ the same method as the establishment of the Alaska
Children's Fund.
Senator Green read from page 1, of the bill, starting on line 12,
"The commissioner of revenue shall manage the trust as an
endowment, with the goal of ensuring that the purchasing power of
the trust will not diminish over time without regard to additional
contributions that may be made to the trust." She wanted to know if
this is standard language.
NEIL SLOTNIC, Deputy Commissioner, Department of Revenue, replied,
"that is consistent with modern endowment theory - how endowments
for universities, for hospitals, for large institutions are
managed." He explained that the intent is to manage for "real rate
of return," or adjusting for inflation, and to protect the
purchasing power of the endowment itself so it does not diminish
over time. He stated that this is to let the beneficiaries of the
endowment know the consistent payout would be from year to year.
Senator Green commented if she were an Arctic Winter Games'
proponent, she would not want the state closely tied to the
management of the trust as proposed in the legislation. She noted
the Department of Revenue would collect a four or five percent
administration fee and suggested that the fund could be managed
privately.
Mr. Sullivan responded that because the state founded the Games,
"maintaining that tie was probably appropriate." He stressed that
the governments of the different regions all participate, with
Lieutenant Governor Fran Ulmer serving as Alaska's representative
to the Games. He added that the international committee that
governs the Games, work closely with all pertinent government
entities.
Mr. Sullivan shared that it was initially considered whether the
trust should be independently managed, but it was decided that,
given the 30-year history, the state should continue to be
involved. He stated that the trust could be managed either way, but
warned that if the trust were managed privately, there would be
similar management fees from the private manager as well.
Senator Green understood Mr. Sullivan's explanation but questioned
why the state should be involved when the organization could
establish its own board of trustees, charter and other measures to
ensure independence from the state.
Co-Chair Kelly ordered the bill HELD in Committee.
SENATE BILL NO. 102
"An Act relating to the information required in an application
for, and to display of social security numbers on, certain
licenses and instructional permits; and providing for an
effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
SENATOR THERRIAULT, sponsor, testified to this Senate version of a
bill introduced by Representative John Coghill, Jr. Senator
Therriault stated that both bills propose to protect the printing
of social security numbers (SSN) on drivers' licenses. He assured
that the SSN would still be required on the applications for
licenses, but would no longer appear on the licenses themselves. He
shared that current regulation stipulates that an individual could
request the omission of the SSN, but emphasized that most Alaskans
are unaware of this option. He expressed that he would like the
suppression of the SSN to be a default.
Senator Therriault continued that this legislation also inserts in
statute, a current regulatory policy providing that if an
individual does not have a SSN, the license applicant could
complete a sworn affidavit indicating that fact. He noted that past
regulations prohibited the issuance of a driver's license to those
individuals who do not have a SSN, but stated that this practice
has stopped.
SFC 01 # 36, Side B 10:56 AM
Senator Therriault relayed a story of a person who lost his wallet
and experienced credit problems that arose from another person who
assumed his identity after obtaining his SSN from his commercial
driver's license and then using that information to receive
financing.
Senator Therriault commented that when this legislation was
originally drafted, he thought that the appearance of SSNs on
commercial drivers' licenses was a federal requirement. He since
learned that the federal government does not require this. As a
result, he prepared an amendment that would expand the bill to
include all types of drivers' licenses.
Senator Therriault spoke to the use of SSNs and the heightened
sensitivity of printing them on drivers' licenses due to the
technological advances in the "modern computer age." He opined that
ten years ago, it was difficult to track information on
individuals. However, he stressed, the Internet, modern database
and search technology, has increased the vulnerability of
individuals if their SSN "falls into the wrong hands."
Senator Green stated that she "very much approved of this" and that
she hoped to become a co-sponsor of the legislation. However, she
requested the sponsor review the history behind the Division of
Motor Vehicles requiring SSNs. She remembered being told, "never to
give that number to anyone," which she said evolved to the practice
of allowing the state to request SSNs "for anything."
Senator Therriault understood that the change was a federal
mandate, citing that "money comes with strings attached" as the
reason behind the state's involvement. He gave commercial drivers'
licenses as an example of a license issued by the state, but
possibly used for driving in other states. He said the federal
government needed a method of tracking individuals for vehicle
citations, whichever state the citation was issued.
Senator Green clarified that Alaska did not initiate the practice
of including SSNs on drivers' licenses.
Senator Therriault affirmed.
Amendment #1: This amendment inserts a new bill section on page 2,
following line 20 of the committee substitute to read as follows.
Sec. 3. AS 28.33.100(b) is amended to read:
(b) In addition to the information required under AS
28.15.111, a commercial driver's license shall include
information determined by the United States Secretary of
Transportation to be appropriate to identify the licensee [,
INCLUDING THE LICENSEE'S SOCIAL SECURITY NUMBER.]
[DELETED TEXT BRACKETED]
Senator Wilken referred to the bill sponsor's testimony on this
matter and moved for adoption.
Without objection, the amendment was ADOPTED.
Co-Chair Donley offered a motion to report SB 102, 22-LS0556\C, as
amended from Committee with accompanying zero fiscal note from the
Department of Administration, Motor Vehicles BRU. There was no
objection that the bill MOVED from Committee.
ADJOURNMENT
Co-Chair Pete Kelly adjourned the meeting at 11:02 AM.
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