Legislature(2001 - 2002)

03/13/2001 10:02 AM FIN

Audio Topic
* first hearing in first committee of referral
+ 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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