Legislature(1995 - 1996)

03/02/1995 09:15 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                          March 2, 1995                                        
                            9:15 a.m.                                          
                                                                               
  TAPES                                                                        
                                                                               
  SFC-95, #9,  Side 1 and 2                                                    
  SFC-95, #11, Side 1, (000-376)                                               
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator Rick Halford,  Co-chairman, convened the  meeting at                 
  approximately 9:15 a.m.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  In  addition  to  Co-chairmen  Halford  and  Frank, Senators                 
  Donley, Phillips, Sharp, and Zharoff  were present.  Senator                 
  Rieger arrived soon after the meeting began.                                 
                                                                               
  ALSO ATTENDING:  Senator Taylor; Senator Salo; Randy Welker,                 
  Legislative  Auditor;  Elmer  Lindstrom, Special  Assistant,                 
  Dept.  of  Health  and  Social  Services;  Barbara  Whiting,                 
  Administrative Officer, Division of Elections, Office of the                 
  Lt. Governor; Dan Fauske, Executive Director, Alaska Housing                 
  Finance  Corporation, Dept. of Revenue; Jan Sieberts, Senior                 
  Vice  President,  National   Bank  of  Alaska;  Wes   Clubb,                 
  President,   Alaska   Homebuilders   Association;   Patricia                 
  Grenier,  aide  to  Senator Kelly;  and  aides  to committee                 
  members and other members of the legislature.                                
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  SB   1 -  REVIEW OF FEDERALLY MANDATED PROGRAMS                              
                                                                               
            Testimony  was  presented  by  Senator Taylor  and                 
  Elmer          Lindstrom.   SB 1  was then  REPORTED OUT  of                 
                 committee  with   a  zero  SFC   fiscal  note                 
                 covering all departments.                                     
                                                                               
  SB   5 -  ELECTION BALLOTS                                                   
                                                                               
            Discussion  was  had  with  Barbara  Whiting   and                 
            Patricia Grenier.   CSSB 5 (STA) was  REPORTED OUT                 
            of  committee  with a  zero  fiscal note  from the                 
            Office of the Governor, Division of Elections.                     
                                                                               
  SB  40 -  APPROP: AHFC TO GENERAL FUND                                       
                                                                               
            Discussion was had with Randy Welker,  Dan Fauske,                 
  Jan       Sieberts,   and  Wes   Clubb.      The  bill   was                 
            subsequently HELD in committee for further review.                 
                                                                               
                                                                               
  SENATE BILL NO.  1                                                           
                                                                               
       An Act relating to state implementation of federal                      
       statutes.                                                               
                                                                               
  Co-chairman Halford  directed that SB  1 be  brought on  for                 
  discussion.   SENATOR  TAYLOR, sponsor  of the  legislation,                 
  noted that the  bill was not originally referred to Finance.                 
  Referral was made when the  legislation picked up additional                 
  fiscal  notes.    The  bill   was  introduced  as  companion                 
  legislation to SJR  7--the Tenth Amendment  resolution which                 
  has already passed  the legislature and been  transmitted to                 
  the Governor.   That resolution  demands that Congress  stop                 
  passing   federal   mandates   which  exceed   Congressional                 
  authority under  the Tenth Amendment.   SB  1 represents  an                 
  attempt  to identify  federal  mandates, both  statutory and                 
  regulatory, which conflict with state policy or exceed state                 
  constitutional limitations.  Similar legislation, passed  in                 
  Colorado last year,  declares that  state government has  an                 
  obligation to the public to do  what is necessary to protect                 
  the  right of  citizens  of the  state  while minimizing  or                 
  eliminating additional cost or regulatory burden.                            
                                                                               
  To  accomplish  the  foregoing goal,  SB  1  requires annual                 
  review of  each  Congressionally  mandated  program  by  the                 
  executive  branch.   An annual  report to  the  Governor and                 
  Legislative  Budget and  Audit  Committee  would  set  forth                 
  conclusions and make recommendations for changes  in federal                 
  law to make programs more cost effective and consistent with                 
  state policy.   A determination  could also be  made by  the                 
  Dept. of Law concerning whether  the mandate exceeds federal                 
  authority.                                                                   
                                                                               
  Sec.  1  of the  bill contains  findings  of urgent  need to                 
  modify  certain  mandates  because   implementation  of  the                 
  mandates  wastes  the  financial  resources  of  the  state,                 
  municipalities, and residents,  and federal regulators often                 
  do not understand the needs and priorities of Alaskans.  The                 
  bill  provides for  legislative review of  federal mandates.                 
  The Legislative Budget and Audit  Committee would be charged                 
  with making recommendations to  the Governor on the  need to                 
  seek a change  in federal statutes, regulations  or policies                 
  suited to state needs, suggest changes in the impacted state                 
  program to  implement the  mandate more  efficiently, or  to                 
  pursue  legal  challenge  to the  validity  of  the mandate.                 
  Passage of SB 1 will add credence to passage of SJR 7.                       
                                                                               
  Senator  Taylor next  referenced fiscal  notes  submitted by                 
  departments, noting the Dept. of Health and Social Services'                 
  claim  it  will need  a $77.0  a  year special  assistant to                 
  review  federal  mandates.    The  Dept.  of  Public  Safety                 
  requests $6.0  to establish  a format and  time table,  seek                 
                                                                               
                                                                               
  field input,  compile responses, draw conclusions, and issue                 
  a report.   The Senator  voiced his belief that  the type of                 
  review envisioned  by SB  1 is  already part  of the  budget                 
  process.  It is difficult to believe that departments do not                 
  review   mandated  programs   with   an   eye  toward   cost                 
  effectiveness and inconsistency with state policy.                           
                                                                               
  Senator  Taylor   acknowledged  that   departments  do   not                 
  presently  review  programs  to  determine  if  they  exceed                 
  constitutional authority.  The intent of  SB 1 is to flag  a                 
  program  for later  review at  the will  of the  Legislative                 
  Budget  and   Audit  Committee   rather  than   to  make   a                 
  determination at the department level.  In that respect,  SB                 
  1 may need to  be amended to strengthen legislative  review.                 
  Senator Taylor voiced his  belief that much of the  work the                 
  proposed  bill  would generate  at  the department  level is                 
  already being done.                                                          
                                                                               
  Co-chairman Halford  asked the sponsor for  a recommendation                 
  on  fiscal notes  to  accompany the  bill.   Senator  Taylor                 
  recommended  a  zero   note.     He  reiterated  that   work                 
  contemplated by the  bill should be  ongoing at the  present                 
  time, particularly in light of passage of SJR 7.                             
                                                                               
  Senator Zharoff directed attention  to page 2, line  13, and                 
  noted  language   referencing  "head  of   another  agency."                 
  Senator Taylor suggested that the  legislature would want to                 
  know if the  Alaska Housing Finance Corporation,  AIDEA, the                 
  railroad,   etc.   are   adversely   impacted   by   federal                 
  legislation.   As an  example, he  cited the  Americans with                 
  Disabilities Act.                                                            
                                                                               
  Senator Zharoff  referenced a  substantial fiscal  note from                 
  the Dept. of Health and Social Services and suggested that a                 
  number  of  federal  mandates  impact   the  department  and                 
  necessitate substantial review.  Senator Taylor concurred.                   
                                                                               
  Senator Rieger asked if mandatory quarterly tax withholdings                 
  or social  security payments  would be  included within  the                 
  definition of  federal mandates.   Senator  Taylor responded                 
  that  the  definition  is generic  and  would  include areas                 
  mentioned by Senator Rieger.  The sponsor advised that those                 
  items  would   likely  be   included  in   reports  to   the                 
  legislature.                                                                 
                                                                               
  Senator Sharp voiced  support for the legislation.  He noted                 
  concern that the state is  often attracted to federal money,                 
  and it provides the necessary match without knowing what the                 
  overall economic impact will be, either long or short  term.                 
  The  proposed  bill would  force  an economic  evaluation, a                 
  determination  of  whether  the  program  is necessary,  and                 
  evaluation of future impact.                                                 
                                                                               
  Senator  Taylor  pointed  to over  $200  million  in federal                 
                                                                               
                                                                               
  mandates, grants, and incentive programs within the Dept. of                 
  Education  and  noted that  the  department did  not request                 
  additional moneys for review and evaluation.                                 
                                                                               
  Senator Phillips  MOVED that SB  1 pass from  committee with                 
  individual  recommendations  and   the  zero  fiscal  notes.                 
  Senator  Zharoff  OBJECTED,  voicing  concern regarding  the                 
  burden that would  be placed  upon the Dept.  of Health  and                 
  Social Services.  He then REMOVED his OBJECTION.                             
                                                                               
  ELMER  LINDSTROM, Special  Assistant,  Dept. of  Health  and                 
  Social Services, came before committee.   He noted the  wide                 
  variation in  fiscal  notes  submitted  by  departments  and                 
  suggested that it  reflects a wide variation  in assumptions                 
  of what the bill would entail.  He explained that since work                 
  within the Dept.  of Health and  Social Services involves  a                 
  great deal of  federal activity,  the department assumes  it                 
  would be  reviewing each  federal dollar  and each  discrete                 
  program  as  a   federal  mandate  and  reporting   new  and                 
  additional information beyond historical analysis.  If it is                 
  the intent of the sponsor and  the legislature that the bill                 
  will   merely   entail   a   "recapitulation"  of   existing                 
  information and efforts, there will be no cost.                              
                                                                               
  Senator Donley voiced  concern that passage of  the proposed                 
  bill would  impose a  mandate on  state departments  without                 
  providing the necessary resources to do the work.  He voiced                 
  support for the  bill but not  for zeroing of fiscal  notes.                 
  The legislature  may not  get the  results it  seeks without                 
  making some accommodation or providing some resources.                       
                                                                               
  Co-chairman Halford  voiced his belief  that departments are                 
  already doing what  the proposed legislation requests.   The                 
  Dept.  of  Health and  Social  Service, in  particular, must                 
  analyze federal programs to maximize federal share, etc.                     
                                                                               
  Co-chairman Halford called for objections  to passage of the                 
  bill.   None were  forthcoming.   SB 1  was REPORTED OUT  of                 
  committee with a  zero Senate Finance Committee  fiscal note                 
  covering all departments.  Co-chairmen Halford and Frank and                 
  Senators Phillips and Sharp signed the committee report with                 
  a "do pass"  recommendation.   Senators Donley, Rieger,  and                 
  Zharoff signed "no recommendation."                                          
                                                                               
                                                                               
  SENATE BILL NO.  5                                                           
                                                                               
       An  Act  prescribing  the  use and  characteristics  of                 
       voting booths employed  in elections  and the color  of                 
       ballots used in state primary elections.                                
                                                                               
  Co-chairman Halford  directed that SB  5 be  brought on  for                 
  discussion.  PATRICIA  GRENIER, aide to Senator  Kelly, came                 
                                                                               
                                                                               
  before  committee.  She explained  that in the past election                 
  voters complained about two things:                                          
                                                                               
       1.   Different colored ballots                                          
       2.   Curtainless suitcase voting booths                                 
                                                                               
  The  proposed  legislation   addresses  those  concerns   by                 
  ensuring  the secrecy of ballots and  the privacy of voting,                 
  in two ways:                                                                 
                                                                               
       1.   Requiring that half of all booths at each precinct                 
  be                                                                           
            curtain booths.                                                    
                                                                               
       2.   Having all  primary ballots printed on white paper                 
  only.                                                                        
                                                                               
  At  present, the  secrecy of  voting  in Alaska  is severely                 
  compromised.  There  are not enough curtain voting booths at                 
  all polling places.  Ms.  Grenier stressed the importance of                 
  maintaining privacy,  both  in terms  of  the color  of  the                 
  ballot and the secrecy provided by curtain booths.                           
                                                                               
  Senator Donley questioned the  zero fiscal note accompanying                 
  the  bill  and  suggested  that  a physical  cost  would  be                 
  involved.  Ms. Grenier advised that  the state already has a                 
  sufficient number of curtain booths.   It is merely a matter                 
  of correct distribution by contractors who set them up.                      
                                                                               
  Senator Zharoff raised the question  of whether it would  be                 
  practical, in rural areas with small populations ,to require                 
  that 50% of  the booths have curtains.  He then asked if the                 
  proposed  change  would  apply  to   municipal  as  well  as                 
  statewide elections, and questioned whether sites at which a                 
  voter picks  up a ballot  (absentee) would  be considered  a                 
  polling  place.   BARBARA  WHITING, Administrative  Officer,                 
  Division  of  Election,  Office of  the  Lt.  Governor, came                 
  before  committee.   She  said  that  the Lt.  Governor  and                 
  division have taken a neutral position on the bill.  Senator                 
  Rieger followed up on one of Senator Zharoff's questions and                 
  asked if the location where one  picks up an absentee ballot                 
  is  considered  a  polling  place.   Ms.  Whiting  responded                 
  affirmatively.                                                               
                                                                               
  Senator Donley  noted supplemental funding requested  by the                 
  division  and  inquired  concerning  lack  of cost  for  the                 
  proposed bill.  Ms. Whiting  described the present procedure                 
  whereby the division issues a bid, and  the award contractor                 
  picks  ups,  delivers,  and  sets  up  voting  booths.   The                 
  division has  a sufficient number of curtain booths to place                 
  half in  every  polling place.   There  is thus  no need  to                 
  purchase additional  booths.   A mistake  by the  contractor                 
  gave rise to the problem encountered by Senator Kelly in the                 
  past election.                                                               
                                                                               
                                                                               
  In response to a question  from Senator Zharoff, Ms. Whiting                 
  advised  of  468  voting  precincts.   She  also  voiced her                 
  understanding that the  proposed bill  would apply to  state                 
  rather than municipal elections.                                             
                                                                               
  Senator Donley spoke to need to  pursue contractors who fail                 
  to satisfactorily perform within contract specifications.                    
                                                                               
  Senator Sharp MOVED  that CSSB 5  (STA) pass from  committee                 
  with individual recommendations and accompanying zero fiscal                 
  note.  No  objection having  been raised, CSSB  5 (STA)  was                 
  REPORTED OUT of committee  with a zero fiscal note  from the                 
  Office of  the Governor, Division of Elections.  All members                 
  signed the committee report with  a "do pass" recommendation                 
  with  the  exception  of  Senator  Zharoff  who  signed  "no                 
  recommendation."                                                             
                                                                               
                                                                               
  SENATE BILL NO. 40                                                           
                                                                               
       An  Act making appropriations  from the  Alaska Housing                 
       Finance Corporation revolving fund to the general fund;                 
       and providing for an effective date.                                    
                                                                               
  Co-chairman  Halford directed that  SB 40 be  brought on for                 
  discussion.    SENATOR SHARP,  sponsor  of  the legislation,                 
  noted that last year the legislature sent a signal to Alaska                 
  Housing  Finance  Corporation  (AHFC) that  the  legislature                 
  expected  a scheduled  return on over  a billion  dollars in                 
  equity   placed   in   the   corporation   over   the  years                 
  (particularly  1980  through  1984).   Simple  five  percent                 
  interest   applied   over  the   last   ten  years   to  the                 
  $1,073,515,000 should  not be too  much to  expect from  the                 
  investment.  If extended out, it would amount to an increase                 
  in equity  to $2.2  billion.   Up  to  this time,  AHFC  has                 
  returned $316 million.                                                       
                                                                               
  Senator Sharp  referenced February  1, 1995,  correspondence                 
  (copy appended as Attachment  A) and said he took  exception                 
  to the $250  million claimed as  a return since that  amount                 
  represents a transfer of assets,  upon which the corporation                 
  will earn  a return,  rather than  an equity  return to  the                 
  state.    Audit  analysis   conducted  last  year  indicated                 
  approximately $500 million in available equity that could be                 
  transferred  without affecting  the  bonding  rating of  the                 
  corporation.    An updated  audit  report dated  February 9,                 
  1995, (copy on  file in  the SFC original  file for SB  40),                 
  contains slight  adjustments to estimated  available equity.                 
  Senator Sharp noted that the updated audit suggests that the                 
  committee might want to consider amending SB 40 to provide a                 
  $200 million draw down each year for the next two years.                     
                                                                               
                                                                               
  Senator Sharp referenced  lack of oversight at AHFC over the                 
  last year or  two and  suggested that it  amounts to  "gross                 
  malfeasance" in management.  He  noted that over $4  million                 
  has  been  paid  in  liability  suits relating  to  employee                 
  problems, gold parachutes for departing executive directors,                 
  five  percent loans  spread  over thirty  years,  etc.   The                 
  Senators voiced concern that that amount of subsidy severely                 
  disrupted  the  real estate  market,  and he  cited examples                 
  whereby  prices increased when  the subsidies were announced                 
  and sellers rather than buyers received the benefit.  In his                 
  concluding comments, Senator Sharp stressed that AHFC should                 
  be considered a continuing source of return of equity to the                 
  state general fund.                                                          
                                                                               
  RANDY  WELKER, Legislative  Auditor, came  before committee.                 
  He  advised  that, last  year,  the division  of legislative                 
  audit identified  $535 million available to  the legislature                 
  over the period of three fiscal years:                                       
                                                                               
       FY 94               $200 million                                        
       FY 95               $214 million                                        
       FY 96               $121 million                                        
                                                                               
  The legislature appropriated $200 million in  FY 95.  At the                 
  request of the  Legislative Budget and Audit  Committee, the                 
  division  updated  and  revised the  foregoing  numbers  and                 
  identified $295 million  for FY 96  and $150 million for  FY                 
  97. In considering  the numbers,  Mr. Welker cautioned  that                 
  members should be aware that all  number come from cash flow                 
  statements prepared by  AHFC.  Funds  are in excess of  cash                 
  flow  needs  over  the  next  several  years.    The primary                 
  adjustment made  by the  division of  legislative audit  was                 
  elimination  of   AHFC's  capital  budget   (from  corporate                 
  receipts) from cash flow projections.   That was intended to                 
  identify  the  maximum  amount.    If  a  capital budget  is                 
  appropriated for  AHFC based on corporate receipts, division                 
  numbers would have to  be adjusted accordingly.  AHFC  has a                 
  "very  aggressive  capital budget  over  the next  five, six                 
  years,  to the tune of . . . $50 to $60 million a year . . .                 
  ."  Cash flow activity for the current fiscal year indicates                 
  that AHFC  is using approximately  $24 million.   Mr. Welker                 
  reiterated that AHFC  has an aggressive capital  budget plan                 
  laid out "well past the year 2000."                                          
                                                                               
  Mr.  Welker   further  cautioned  that  in   reviewing  bond                 
  covenants and legal documents associated with AHFC  activity                 
  since prior division  review, the  division found a  "poison                 
  pill"  in  underlying  documentation  on  a line  of  credit                 
  agreement  for a  November bond issue.   The  provision says                 
  that  should  the legislature  take  any action  to transfer                 
  assets away from the corporation,  the $235 million in bonds                 
  would be considered  in default.   That agreement was for  a                 
  short-term funding arrangement.  AHFC is of the opinion that                 
  the short-term funding  will be  rolled over into  long-term                 
                                                                               
                                                                               
  funding within the FY 96 time frame.  Once that roll over to                 
  long-term  financing occurs, the  default provision would no                 
  longer be applicable.  Mr. Welker advised that the agreement                 
  provides  for  AHFC  to  request  a  waiver  of  the default                 
  provision.  That is  one alternative that could be  pursued.                 
  AHFC believes it  will be out  from under that provision  by                 
  the  end  of  FY  96.    Should the  legislature  decide  to                 
  appropriate,  the  division  of legislative  audit  does not                 
  believe the provision would impact  an appropriation, but it                 
  might impact timing of the transfer of cash from AHFC to the                 
  general fund.                                                                
                                                                               
  Again  addressing  the  corporation's  capital  budget,  Mr.                 
  Welker reiterated  that  numbers  developed  by  Legislative                 
  Audit  are   derived  from   the  corporation's  cash   flow                 
  projections that show that the corporation  would be able to                 
  maintain current programs even  with the proposed withdrawal                 
  of cash.  However, the withdrawal would not bode well should                 
  there be a major  economic downturn and AHFC needed  to rely                 
  on surplus assets to bail out bond issues.                                   
                                                                               
  In his concluding  comments, Mr. Welker noted  credit rating                 
  concerns that  would be raised  by withdrawal action  by the                 
  legislature. Standard & Poors has  issued a negative outlook                 
  on  certain  AHFC  bonds  because  of  continued legislative                 
  interest in  the assets of the corporation.  There is no way                 
  of knowing what impact a further appropriation would have on                 
  AHFC's  credit  rating.    Standard  &  Poors  has  put  the                 
  corporation on a negative outlook pending a downgrade should                 
  a transfer occur.  There is no indication how significant or                 
  insignificant that  downgrade might  be.   If downgrade  was                 
  from investment grade to below  investment grade, that would                 
  make the  market "almost unreachable  for AHFC."   There are                 
  numerous  opinions  on how  drastic  the bond  rating change                 
  might be.                                                                    
                                                                               
  Co-chairman  Halford  inquired   regarding  the  effect   of                 
  triggering the "poison pill" provision, asking if AHFC would                 
  go to the market and borrow moneys to cover the bonds.   Mr.                 
  Welker acknowledged that  AHFC would "have  to come up  with                 
  some  means  of   repaying  those   bonds."    Whether   the                 
  corporation could  go to  the market  to accomplish  that is                 
  unsure.  Mr. Welker  further advised that while  the default                 
  provision remains in place,  he could not say how  ready the                 
  bank would be to trigger that provision.  There is a cost to                 
  the bank to do  so.  If the bank does  not anticipate a risk                 
  to the bonds,  there may be a reluctance  to declare them in                 
  default based on a technicality.                                             
                                                                               
  Co-chairman   Halford  asked   if   the  legislature   could                 
  appropriate   directly  from  AHFC   to  a   department  for                 
  operational costs.   Mr. Welker said  he was unaware of  any                 
  prohibition.    He added  that  default provisions  speak to                 
  transfer of "any  asset away from AHFC."   In response  to a                 
                                                                               
                                                                               
  further question from the  Co-chairman, Mr. Welker  advised,                 
  "I  believe  the  legislature could  designate  AHFC  as the                 
  funding source for any appropriation."                                       
                                                                               
  Senator  Sharp   raised  a   question  regarding   a  rating                 
  downgrade, suggesting that a system  of various levels is in                 
  place.    Mr.  Welker acknowledged  that  there  are several                 
  levels  of  investment  bond ratings  to  go  through before                 
  ratings reach below investment grade.                                        
                                                                               
  Referencing the "poison pill" provision, Senator Sharp asked                 
  if  it  places   AHFC's  capital  budget  in   jeopardy  for                 
  authorizing  expenditures  from  the  equity  account.    He                 
  further inquired regarding corporate ability to build assets                 
  for its  own use without  legislative approval.   Mr. Welker                 
  suggested that the  resulting conclusion  would be that  the                 
  corporation is not transferring but merely converting from a                 
  cash asset to  a physical  or structural asset.   The  total                 
  asset value of  the corporation has  thus not been  reduced.                 
  Mr. Welker acknowledged  that such action  impacts corporate                 
  liquidity.                                                                   
                                                                               
  Co-chairman Frank voiced his understanding that  the "poison                 
  pill" provision  represents a  technical default  that might                 
  result  in  the  lender  being   able  to  demand  immediate                 
  repayment.    He  further advised  that  the  arrangement is                 
  temporary and  intended to  be refunded with  "some type  of                 
  longer-term debt instrument."  If  the legislature withdraws                 
  moneys from the  corporation, the financing bank,  should it                 
  choose to do so,  could demand payment, and AHFC  would have                 
  to  provide repayment.   In making  that demand,  the lender                 
  would forego much of its interest earning.                                   
                                                                               
  End:      SFC-95, #9, Side 1                                                 
  Begin:    SFC-95, #9, Side 2                                                 
                                                                               
  Co-chairman  Frank  then  stressed  that  the   lender  that                 
  provided  funding  with  the "poison  pill"  proviso  should                 
  "absolutely never be  part of a  new financing or a  rolling                 
  financing agreement  that would allow them to  get more fees                 
  and interest .  . . ."   He attested  to competitiveness  in                 
  financial markets and need to  deal with "financing entities                 
  that would treat us right as  opposed to trying to blackmail                 
  us  into  those  kinds  of   terms."    Co-chairman  Halford                 
  concurred but questioned whether the "poison pill" provision                 
  was invented by the lender or AHFC.                                          
                                                                               
  In response to a question from Senator Sharp concerning bond                 
  counsel oversight when  the questioned provision was  agreed                 
  to,  Mr.  Welker  said  that  correspondence  regarding  the                 
  provision indicated it was a demand by the bank.  It did not                 
  appear to be generated internally at  AHFC.  It was reviewed                 
  by  legal counsel on contract to AHFC as well as AHFC staff.                 
  The end result was that the provision prevailed and remained                 
                                                                               
                                                                               
  a part of the line of credit.                                                
                                                                               
  Senator Sharp referenced AHFC capital budget matching of HUD                 
  funds as an example of a situation where AHFC assets are not                 
  retained.  Match funding flows from AHFC to regional housing                 
  authorities.  Those  buildings are not  owned by AHFC.   Mr.                 
  Welker concurred.                                                            
                                                                               
  In response  to comments  regarding lack of  downgrade as  a                 
  result of  last year's  appropriation from  the corporation,                 
  Mr. Welker  acknowledged that downgrade  did not occur.   He                 
  noted,  however,  that  Moodys  placed  AHFC on  a  negative                 
  outlook.  Standard and Poors has given earlier warning  than                 
  the state had the benefit of last year.                                      
                                                                               
  Senator  Rieger voiced his  recollection that the questioned                 
  loan covenant is within a borrowing used to finance the $200                 
  million payment to the  state.  Mr. Welker advised  that the                 
  two  are  not related.   Senator  Rieger  then asked  if the                 
  source of the  funds and administrator  of the loan are  the                 
  same entity or is the bank a pass through for other lenders.                 
  Mr. Welker  advised that he did  not know.  He  told members                 
  that the lender  is a major bank out of Germany.  He further                 
  surmised that  a bank  of that  size is  the primary  entity                 
  involved  and  is  lending  its   own  capital  rather  than                 
  providing administrative services for another lender.                        
                                                                               
  Co-chairman  Frank  directed  attention  to AHFC's  combined                 
  balance  sheet within  the  1994 annual  report.   He  noted                 
  assets of $4.4 billion and combined equities and liabilities                 
  of $4.4  billion.  Total  fund equity as  of June 30,  1994,                 
  amounts to  $1.7 billion.   That  is 39%  equity.   The  Co-                 
  chairman voiced  his assumption  that the  foregoing numbers                 
  reflect the  status before  withdrawal of  last year's  $200                 
  million.  When that appropriation  is subtracted, the equity                 
  percentage is 37%.   Equity capitalization for  banks ranges                 
  from 7 to  10%.  He  then suggested that  if AHFC equity  is                 
  reduced  from  39% to  33%,  by subsequent  withdrawals, the                 
  corporation remains  "hugely capitalized."   The corporation                 
  has received  contributed capital of $1,085,000,000  and has                 
  retained earnings of $686.                                                   
                                                                               
  Co-chairman  Halford  noted that  while the  title of  SB 40                 
  speaks to "An act making an appropriation," language  in the                 
  body of the  bill relates  to an amount  "anticipated to  be                 
  transferred by the  direction of the Alaska  Housing Finance                 
  Corporation Board."  He then asked  if the legislation is an                 
  appropriation or  something  less  and  suggested  that  the                 
  question be put to the drafter.                                              
                                                                               
  Co-chairman  Halford  further   noted  that  the  Governor's                 
  balance  sheet  evidences $70  million from  AHFC.   He then                 
  inquired concerning the amount of the corporation's proposed                 
  capital  budget.  Mr. Welker answered that the draft capital                 
                                                                               
                                                                               
  budget shows $52,749,600 from corporate receipts.  The total                 
  is  $72,275,000,  including  federal  funds.     Co-chairman                 
  Halford  asked if the  Governor's proposal  and that  of the                 
  corporation   itself   are   different    from   legislative                 
  appropriation, in terms of impact on the bond covenant.  Mr.                 
  Welker said that if the $70 million proposed by the Governor                 
  consists  of  $50  million  in  the capital  budget  and  an                 
  additional $20  million  from  AHFC's  established  dividend                 
  program, it would be viewed  differently by rating agencies.                 
  Rating  agencies recognize  AHFC's  dividend  program as  an                 
  acceptable way of returning capital.   A $70 cash extraction                 
  from  AHFC  to  the  general   fund  would  have  the   same                 
  implication as SB 40.                                                        
                                                                               
  Senator Rieger  referenced testimony before  the Legislative                 
  Budget and Audit Committee indicating that anticipated FY 95                 
  earnings would be "in the $90 million range."  There is thus                 
  a distinction  between withdrawing earnings  and withdrawing                 
  capital.   Mr. Welker stressed  the importance of bearing in                 
  mind that many  of the assets  within the "new AHFC"  result                 
  from combination of the old AHFC and ASHA.  Many of the ASHA                 
  programs  are  federally   funded.    He  then   voiced  his                 
  understanding that it is not the intent to impair those low-                 
  income housing programs.  It is the equity in old AHFC, that                 
  generates surplus assets, that is  addressed in the proposed                 
  bill.                                                                        
                                                                               
  Co-chairman  Frank  voiced his  understanding  that  the $70                 
  million proposed  by the Governor  is in addition  to AHFC's                 
  capital budget.   The Governor's proposed capital  budget is                 
  $135 million.                                                                
                                                                               
  Referencing  earlier comments  by  Senator Rieger  regarding                 
  earnings of the corporation, Co-chairman Frank stressed need                 
  to examine the purpose of AHFC and what equity  is needed to                 
  maintain that  purpose.   When AHFC  received large  capital                 
  injections in the  early 1980s, its purpose was to subsidize                 
  housing  for  many   state  residents.     Over  time,   the                 
  legislature changed  AHFC policy  to limit  subsidy to  that                 
  which  can  be  achieved  through  pass through  of  federal                 
  subsidies.    Ratcheting down  has  eliminated subsidies  to                 
  those who do not qualify for federal programs, yet a billion                 
  in contributed  capital remains within the corporation, plus                 
  $500 million in retained earnings.    The legislature is now                 
  looking at AHFC's ability to contribute to the state general                 
  fund  on an ongoing basis.   An assessment must thus be made                 
  as to the amount the corporation needs as a capital base  to                 
  maintain existing programs.  It  cannot be assumed that  the                 
  corporation needs  everything it now has.   A fresh economic                 
  look  is  needed.   The  Legislative Auditor  has identified                 
  "what their clear excess appears  to be."  Co-chairman Frank                 
  voiced his belief that the purposes of the corporation could                 
  be  accomplished with "much, much less."   The fund contains                 
  $1.7 billion and is earning approximately $70 million.  That                 
                                                                               
                                                                               
  is not a good  return on investment.  Placement of  the fund                 
  balance in 30-year  treasury bonds would be  yielding "close                 
  to 8%  . . . ."   The state is  facing a fiscal  gap of $500                 
  million.   A $1.7 billion corporation could  be an important                 
  part of Alaska's long-term fiscal plan.                                      
                                                                               
  Senator Sharp referenced  an earlier inquiry by  Co-chairman                 
  Halford regarding wording in  both the title and body  of SB                 
  40.   He explained that  it is patterned  on language in the                 
  budget last year.   Language which allows the AHFC  board of                 
  directors  to  transfer  the  funds  and make  decisions  on                 
  surplus  moneys was intended  to be more  acceptable to Wall                 
  Street.    Co-chairman Halford  voiced  his belief  that the                 
  proposed bill  is not  an appropriation  since  there is  no                 
  mandate to deposit.  Mr. Welker concurred.                                   
                                                                               
  Senator  Rieger  reiterated  remarks  by  Co-chairman  Frank                 
  regarding  the purpose  of expansion  of  AHFC in  the early                 
  1980s.   The  ultimate result  was that  the  average Alaska                 
  homeowner benefitted.  The first of  a series of mistakes by                 
  the corporation was resistance to a dividend  payout and the                 
  fact  that payouts  have been low.   Senator  Rieger advised                 
  that, in addition, the legislature made a further mistake in                 
  merging AHFC and ASHA.  The  present perception is that this                 
  $1.7  billion  equity institution  does  not serve  the vast                 
  majority of Alaskans.   It instead serves  special interests                 
  "out  on the fringes"  who are getting  special 5% programs,                 
  etc.   If AHFC is to  retain support in the  legislature, it                 
  will  "have  to  do  something   for  all  Alaskans."    The                 
  corporation is noncompetitive at 10% when the  market is 8.5                 
  to 9%.   Testimony before the  Legislative Budget and  Audit                 
  Committee  was  that  the corporation  could  have  used its                 
  assets to reduce its interest rate.  It did not have  to use                 
  arbitrage earnings in  the manner in  which they were  used.                 
  Senator   Rieger  asked   that   the  committee   "entertain                 
  resplitting  AHFC from ASHA and let this corporation do some                 
  good  for  its original  purpose."   He  suggested  that the                 
  legislature  should  support AHFC  in  a workable  manner or                 
  dissolve it entirely.  Withdrawing  $200 million annually is                 
  not likely to create beneficial interest rates for Alaskans.                 
  It will,  however,  perpetuate  fringe  programs  until  the                 
  agency collapses.                                                            
                                                                               
  Senator   Zharoff   echoed  Co-chairman   Halford's  concern                 
  regarding language  in the  body of  the bill.   Mr.  Welker                 
  advised that as currently written, it is up to  the board of                 
  directors of  AHFC to  decide whether  or not  any of  "this                 
  money  would be transferred  to the general  fund."  Senator                 
  Zharoff asked  if the unrestricted cash is  subject to sweep                 
  to fill the void in the  constitutional budget reserve.  Mr.                 
  Welker voiced his understanding that  the assets of AHFC are                 
  not subject to sweep.  He  acknowledged that if removed from                 
  the  corporation and placed in the  general fund, they would                 
  become  vulnerable.     The  sweep  is  a   fiscal  year-end                 
                                                                               
                                                                               
  calculation.                                                                 
                                                                               
  Further discussion of the sweep,  calculated for the end  of                 
  FY 96, followed.                                                             
                                                                               
  Senator Donley concurred in comments  by Senator Rieger that                 
  AHFC  no  longer  serves  the  majority  of  Alaskans.    He                 
  questioned why it  was continued once discounted  rates were                 
  no longer part of the program.  He suggested that the recent                 
  5% program  was a  fiasco.  He  voiced need to  redefine the                 
  program so that the corporation serves more Alaskans.                        
                                                                               
  DAN FAUSKE,  CEO  and  Executive  Director,  Alaska  Housing                 
  Finance Corporation, came before committee.  He advised that                 
  he had  been on  the job only  two days.   Prior  to joining                 
  AHFC,  he  served  for  ten  years as  chief  financial  and                 
  administrative officer  for the  North Slope  Borough.   Mr.                 
  Fauske advised that  he has extensive experience  in dealing                 
  with  bond issues and ratings.   He cautioned that questions                 
  of bond ratings  are serious issues.   He explained that  he                 
  had spent  the past  ten years  at the  North Slope  Borough                 
  "getting  one  back."    In  a teleconference  last  Friday,                 
  Standard and Poors indicated they are seriously concerned by                 
  the uncertainty.  That is the natural hesitancy and paranoia                 
  of  rating  agencies which  have a  reputation to  uphold in                 
  terms of the ratings upon which investors rely.  Another key                 
  consideration is that AHFC, unlike any other organization in                 
  the United States, is a general obligation in and of itself.                 
  It is backed  by the full faith  and credit of AHFC.   Other                 
  housing  organizations  are  backed by  the  full  faith and                 
  credit of the resident  state.  AHFC assets are  pledged for                 
  the  payment of  debt.   Mr.  Fauske said  that  he was  not                 
  suggesting  that there  is not  room to  "work within  those                 
  numbers."  There is a concern, however, as to how much money                 
  is going to be taken out and the subsequent reaction of bond                 
  rating agencies.                                                             
                                                                               
  Mr. Fauske explained  that he had discussed  presentation of                 
  numbers and scenarios with Standard and Poors  in an attempt                 
  to determine what rating agencies might be comfortable with.                 
  He stressed the importance of maintaining the rating, saying                 
  that AHFC is one of the strongest assets owned by the state.                 
  Protecting the  corporation and  maintaining its ability  to                 
  access capital  markets is important.   Mr. Fauske  spoke to                 
  AHFC assistance in providing North Slope residents access to                 
  loans.                                                                       
                                                                               
  Senator Phillips  asked  if a  commitment  by the  state  to                 
  withdraw specific amounts ($200 and $100 million were cited)                 
  each year over a two to three-year period and then terminate                 
  withdrawals  at the  end  of that  time  would satisfy  bond                 
  market concerns.  Mr. Fauske  responded that the methodology                 
  would be correct,  but he  advised that he  was unsure  what                 
  amounts might be acceptable until  numbers were presented to                 
                                                                               
                                                                               
  rating agencies.                                                             
                                                                               
  Co-chairman Frank  spoke to  legislative attempts,  over the                 
  past six years,  to elicit a  meaningful dividend return  to                 
  the state from AHFC.  Those attempts have been frustrated by                 
  "stonewalling" by the  corporation.  As an  alternative, the                 
  legislature  took  action   under  its   power  to  do   so.                 
  Legislative action  was not  done without justification  and                 
  analysis.    Legislative  auditors provided  information  on                 
  excess reserves, and the  appropriation were consistent with                 
  that report.  If AHFC and  the legislature were to develop a                 
  meaningful program of return of excess capital to the state,                 
  that return could become an important  part of how the state                 
  meets its ongoing  fiscal gap,  could alleviate pressure  to                 
  appropriate from AHFC  on an ad hoc  basis, ensure long-term                 
  viability of AHFC for  its statutory purposes, and  send the                 
  right  signals  to   the  bond  market.     The  Co-chairman                 
  reiterated that legislative  action is the direct  result of                 
  "the absolute stonewalling attitude of AHFC."                                
                                                                               
  Senator Sharp concurred  in comments  by Co-chairman  Frank.                 
  He further commented that the purpose of AHFC, over the last                 
  five years, has  not been  to provide first  home buyers  an                 
  opportunity to purchase a home (one of the original purposes                 
  of the  corporation).   AHFC has  instead found  a niche  in                 
  refinancing  its  own  mortgages  and  funding  low-interest                 
  programs.  He suggested  that sale of the $115  million, 5%,                 
  30-year mortgage portfolio  would yield  only $85 per  $100.                 
  That represents a great loss of equity.                                      
                                                                               
  Co-chairman Halford voiced concern over the fact that AHFC's                 
  $50 million capital budget  is half as large as  the "entire                 
  capital budget for the whole rest  of the state in all other                 
  functions."  He then asked how  the legislature could reduce                 
  the program  from $1.8 billion  down to  $500 million  while                 
  maintaining its health  and function.  He suggested  that if                 
  that could not be done, the  corporation should be done away                 
  with.                                                                        
                                                                               
  Senator Sharp suggested that commercial  banks have not been                 
  financing  housing through AFHC, aside from special interest                 
  projects.  The federal housing market is much more feasible.                 
  AHFC  is  not  serving  the   general  mortgage  market  for                 
  Alaskans.    It  is being  manipulated  by  special interest                 
  groups.                                                                      
                                                                               
  End:      SFC-95,  #9, Side 2                                                
  Begin:    SFC-95, #11, Side 1                                                
                                                                               
  JAN  SIEBERTS,  Senior  Vice  President,  National  Bank  of                 
  Alaska,  and member,  legislative committee,  Alaska Bankers                 
  Association, came  before committee.  He  referenced passage                 
  of a resolution by  the Association in support of  AHFC, but                 
  advised that  his comments  at this  time would  be made  on                 
                                                                               
                                                                               
  behalf of  NBA which  services $2.4  billion in  residential                 
  loans throughout the state.  NBA's impact and involvement in                 
  housing issues surpasses  the combined efforts of  all other                 
  financial institutions statewide, excluding AHFC.                            
                                                                               
  Mr. Sieberts voiced support for  AHFC, saying that it serves                 
  an important purpose in Alaska.  In much  of the state there                 
  would   be   no   long-term  home   financing   without  the                 
  corporation.   He  acknowledged legislative  frustration and                 
  suggested that  recent reorganization is partially  to blame                 
  as well  as need  to restructure  the board  to provide  for                 
  ongoing legislative involvement.                                             
                                                                               
  National Bank of Alaska envisions AHFC's role, over the long                 
  term, to be low to moderate-income financing.  That involves                 
  multifamily housing and rental units for that segment of the                 
  public.     Involvement  in   rural  Alaska   is  absolutely                 
  essential.   Never before addressed  special-needs financing                 
  is an important function.   He cited the St.  Vincent DePaul                 
  facility for the homeless in Juneau as an example.                           
                                                                               
  Mr. Sieberts said that the owners  and managers of NBA could                 
  not sustain  the operating  scrutiny applied  to  AHFC.   He                 
  voiced his belief that AHFC is headed in the right direction                 
  in terms of  meeting state needs.   He further advised  that                 
  NBA has long advocated a sustained dividend program  to meet                 
  legislative needs.   On the  other hand, taking  20% of  the                 
  capital from the corporation in one appropriation could have                 
  devastating effects.   Any corporation  losing 20 to  25% of                 
  its equity over a twelve-month   or twenty-four-month period                 
  would provide  cause for  alarm in  terms of  ratings.   Mr.                 
  Sieberts voiced  his belief that if that happens, there will                 
  probably be no ratings.   Rather than ratcheting down AHFC's                 
  rating,  rating agencies  would withdraw the  rating because                 
  the impact of removal of capital would be unknown.                           
                                                                               
  Mr. Sieberts urged  the legislature  to develop a  long-term                 
  sustainable  dividend  program  for  the  corporation.    He                 
  further encouraged the committee to change the  directorship                 
  of the  corporation to allow for more  direct involvement of                 
  the  legislature.   As an  aside, Mr. Sieberts  advised that                 
  through attendance at  AHFC board meetings, he  had observed                 
  that  "more low-income,  moderate-income people  show  up at                 
  their  board  meetings   than  are  showing  up   for  these                 
  hearings."   There is thus a constituency and great interest                 
  by that constituency.                                                        
                                                                               
  Co-chairman Halford reiterated  need to  reduce the size  of                 
  the corporation while maintaining its health.                                
                                                                               
  WES  CLUBB,  PRESIDENT,  ALASKA   HOMEBUILDERS  ASSOCIATION,                 
  voiced need to define AHFC's role before determining what it                 
  is to accomplish.  He suggested that no one in attendance at                 
  the present meeting  knows what AHFC does, how  its programs                 
                                                                               
                                                                               
  are funded, matching needs,  etc.  It is important  that the                 
  committee have a  good understanding of that  and from there                 
  define the direction in which the corporation is to go.                      
                                                                               
  Co-chairman  Halford  advised  that  legislators  understood                 
  AHFC's function before the merger.   He acknowledged lack of                 
  information  concerning  what "the  other pieces  that we're                 
  trying to do out there."  Mr. Clubb concurred that  AHFC has                 
  changed its role and direction over the last few years.  The                 
  corporation is "doing more volume in rural Alaska than DC&RA                 
  did."   That is  definable.   AHFC is  "taking care  of more                 
  special needs housing:"  seniors, homeless,  weatherization,                 
  etc.                                                                         
                                                                               
  Mr. Clubb cautioned that "the impacts from the standpoint of                 
  bond rating, and that  type of thing, are  very real."   The                 
  person that will pay the price is "going to be the people of                 
  Alaska . . . ."  It is very  important that the committee be                 
  "cautionary" and attempt to develop a long-term contribution                 
  program.  A wholesale  taking is "one of the  most dangerous                 
  things  that  this body  can do."    Alaska has  created the                 
  finest housing agency in the country.   It would be wrong to                 
  destroy it at this time.                                                     
                                                                               
  Mr.  Clubb  stressed the  importance  of AHFC  to  the state                 
  homebuilders' association.   He said  that housing needs  in                 
  rural areas are very real.  Hundreds of thousands of dollars                 
  have  been  spent  in  housing  needs  assessments.    Those                 
  assessments  evidenced that  over 10,000  housing  units are                 
  necessary   in   rural   Alaska   in   addition  to   needed                 
  weatherization  and improvements  to existing  homes.   That                 
  need  can only  be met  by something  like AHFC.   Mr. Clubb                 
  again urged caution.   He voiced support  for the Governor's                 
  proposal for a contribution program that is sustainable over                 
  time.   The ability to obtain  approval of such a program by                 
  bond rating agencies is very real.                                           
                                                                               
  Co-chairman Halford asked  if Mr. Clubb thought  AHFC should                 
  have a capital budget  equal to half the capital  budget for                 
  the entire state.  Mr. Clubb said  he could not speak to the                 
  issue since  he did not know specifically what AHFC's budget                 
  entails.   AHFC is a  $4.4 billion company.   A $50  million                 
  capital budget  does not  appear unreasonable.   Co-chairman                 
  Halford  advised  that  he  was  not  willing  to support  a                 
  corporation twice the size  of the state budget.   Mr. Clubb                 
  noted that the  $4.4 billion is  a function of "over  30,000                 
  loans  out there  . .  .  to say  nothing about  the special                 
  interest housing, the senior housing projects . . . ."                       
                                                                               
  Senator Randy Phillips  advised that over two-thirds  of his                 
  constituents   want  money  withdrawn   from  AHFC  to  fund                 
  government.  Mr. Sieberts said  that from NBA's perspective,                 
  many statewide housing needs have not been met.  Congress is                 
  constantly asking federal housing programs to do more.  Much                 
                                                                               
                                                                               
  more needs to  be done in Alaska.   He voiced his  hope that                 
  with   restructuring,  AHFC  would   be  encouraged  by  the                 
  legislature to do  more.  Much of the  housing stock in much                 
  of Alaska  is beginning to deteriorate rapidly.   Alaska has                 
  the  tools to deal with the problem.   However, it cannot be                 
  effectively  dealt  with  if  AHFC  changes  management  and                 
  directors every  two years,  and the  corporation remains  a                 
  political football.  Mr. Clubb concurred, advising that AHFC                 
  needs  to stop having "rent execs."  The stability of a $4.4                 
  billion company is  at risk.  It  is important that  some of                 
  the politics of the position be taken away.                                  
                                                                               
  Co-chairman  Halford  referenced  a proposed  constitutional                 
  amendment that might be  of assistance.  He then  voiced his                 
  belief that executives  and board  members of the  permanent                 
  fund, board members of AHFC, and board members of the Alaska                 
  Railroad should not  be subject to  removal each time a  new                 
  governor is elected.   Those board members should  also come                 
  before the legislature  for confirmation.  Mr.  Clubb voiced                 
  support  for that  approach, advising that  wholesale change                 
  through the political process destroys  both credibility and                 
  ability to plan on a long-term basis.                                        
                                                                               
  Discussion of the makeup of  the AHFC board followed between                 
  committee members, Mr. Sieberts, and Mr. Clubb.                              
                                                                               
  Co-chairman Halford queried  the testifiers concerning their                 
  thoughts  on reseparation  of AHFC.   Mr.  Clubb  voiced his                 
  opinion that it would be a  big mistake.  He noted that  the                 
  legislature  used  to fund  $20  to  $25 million  a  year in                 
  general funds  to operate the previously  existing agencies.                 
  Today that operation  is within the parameters  and earnings                 
  of AHFC.  He  again stressed the detrimental effect  of lack                 
  of management stability and staff who  work in constant fear                 
  of losing their jobs.                                                        
                                                                               
  Mr. Sieberts acknowledged concern over consolidation by some                 
  at NBA.   However, the transition has  worked "fairly well."                 
  He said that if  the corporation was again to  be separated,                 
  he  would  recommend leaving  rural  housing and  low income                 
  urban  programs  together and  moving  out ASHA  management.                 
  Greater  leverage  of  moneys  for  rural  Alaska  could  be                 
  achieved if housing aspects remain intact.                                   
                                                                               
  Co-chairman  Frank  asked if  Mr.  Sieberts would  support a                 
  professional  review  of  the   corporation,  its  statutory                 
  mandates,  and capitalization  to  determine  whether it  is                 
  adequately or over  capitalized.   He suggested that  review                 
  might highlight techniques the corporation  is not now using                 
  that might  allow for an increase  on the rate of  return on                 
  assets and equity.  Mr. Sieberts advised that NBA constantly                 
  brings  consultants  in  to  evaluate internal  performance.                 
  That process is ongoing  and could be conducted for  AHFC as                 
  well.   Mr. Sieberts  stressed need to  develop a  long-term                 
                                                                               
                                                                               
  sustainable program  rather than  a "knee-jerk"  withdrawal.                 
  Mr. Clubb acknowledged the complexity of  issues surrounding                 
  the corporation.   He again stressed  that AHFC is a  stand-                 
  alone entity.   It is not guaranteed by the State of Alaska.                 
  Speaking to  appropriation from  the corporation,  Mr. Clubb                 
  raised a historical question concerning  whether in doing so                 
  without the approval  of the  board of  directors the  state                 
  incurs a liability to guarantee the bonds.                                   
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 11:15 a.m.                        
                                                                               

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