Legislature(2001 - 2002)

04/25/2001 09:11 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     SENATE FINANCE COMMITTEE                                                                                 
                          April 25, 2001                                                                                      
                              9:11 AM                                                                                         
SFC-01 # 85, Side A                                                                                                             
SFC 01 # 85, Side B                                                                                                             
CALL TO ORDER                                                                                                               
Co-Chair Pete  Kelly convened the meeting at approximately  9:11 AM.                                                            
Senator Dave Donley, Co-Chair                                                                                                   
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Jerry Ward, Vice Chair                                                                                                  
Senator Loren Leman                                                                                                             
Senator Gary Wilken                                                                                                             
Senator Alan Austerman                                                                                                          
Senator Lyman Hoffman                                                                                                           
Senator Donald Olson                                                                                                            
Senator Lydia Green                                                                                                             
Also Attending:   JOHN BITNEY, Legislative  Liaison, Alaska  Housing                                                          
Finance Corporation,  Department of Revenue; PAUL  ROETMAN, staff to                                                            
Senator  Leman;  DEBBIE OSSIANDER,  Legislative  Chair  and  Member,                                                            
Anchorage   School  Board;   ALISON  ELGEE,   Deputy  Commissioner,                                                             
Department of Administration;  BRUCE JOHNSON, Deputy Commissioner of                                                            
Education,  Department  of Education  and Early  Development;  CHRIS                                                            
CHRISTENSEN,  Deputy Administrative  Director, Alaska Court  System;                                                            
ROBERT   STORER,   Executive   Director,   Alaska   Permanent   Fund                                                            
Corporation,  Department of Revenue;  RON LORENSON, outside  counsel                                                            
for the Alaska Permanent Fund Corporation                                                                                       
Attending via  Teleconference:  From Oklahoma: MELISSA  HILL, Alaska                                                          
Teacher  Placement  Program;  From Anchorage:  JOHN  KELSEY,  former                                                            
trustee, Alaska Permanent Fund Corporation                                                                                      
SUMMARY INFORMATION                                                                                                         
SB 181-SMALL COMMUNITY HOUSING LOANS                                                                                            
The Committee heard from  the Alaska Housing Finance Corporation and                                                            
a committee substitute  was adopted. The bill was held in Committee.                                                            
SB 149-TEACHER INCENTIVES                                                                                                       
The  Committee   heard   from  the   sponsor,   the  Department   of                                                            
Administration,  the Department of  Education and Early Development                                                             
and  representatives  from school  districts.  The  bill moved  from                                                            
SB 161-NO PAY FOR JUDGES UNTIL DECISION                                                                                         
The Committee  heard from the sponsor  and the Alaska Court  System.                                                            
The bill was held in Committee.                                                                                                 
SB  92-REMOVAL OF MEMBERS OF THE PF BOARD                                                                                       
The Committee heard from  the Alaska Permanent Fund Corporation, the                                                            
Corporation's legal counsel  and a former board member. The bill was                                                            
held in Committee.                                                                                                              
HB 149-PRIVATE PRISON IN KENAI                                                                                                  
This bill was scheduled but not heard.                                                                                          
     SENATE BILL NO. 181                                                                                                        
     "An  Act  making  the interest  rate  for  the  Alaska  Housing                                                            
     Finance  Corporation's small  community housing mortgage  loans                                                            
     the  same as  the interest  rate  on mortgage  loans  purchased                                                            
     under the corporation's  special mortgage loan purchase program                                                            
     from  the  proceeds of  the  most recent  applicable  issue  of                                                            
     taxable bonds  before the origination or purchase  of the small                                                            
     community housing mortgage loans."                                                                                         
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Co-Chair Donley indicated  he had a proposed committee substitute to                                                            
distribute to Committee members for consideration.                                                                              
AT EASE 9:10 AM / 9:17 AM                                                                                                       
Co-Chair Donley  moved for adoption  of CS SB 181, 22-LS0488/S  as a                                                            
working  draft and  explained  the changes.  He noted  the  original                                                            
version of  the bill eliminates the  one-percent subsidy  within the                                                            
Housing  Assistance   Loan  Fund   (HALF)  program.  The   committee                                                            
substitute, he  stated, retains this subsidy for the  first $100,000                                                            
value  of a residential  purchase  and would  limit availability  to                                                            
only those communities  with an average cost of living  equal to, or                                                            
greater than, 125 percent of the statewide average.                                                                             
Senator  Hoffman objected  and  shared he  had a  conversation  with                                                            
representatives  from the Alaska Housing Finance Corporation  (AHFC)                                                            
where he learned  that limiting availability  of the subsidy  to any                                                            
amount less than $200,000  would jeopardize the dividend provided to                                                            
the state  treasury. He  commented that this  limitation would  also                                                            
"cripple  the housing  program in  many rural areas  of the  state."                                                            
stressed  the  existing  allowances  are  necessary  to  ensure  the                                                            
continuation  of  the program's  ability  to  offer  lower  interest                                                            
rates. He requested a representative  of the Corporation address the                                                            
benefits of the program.                                                                                                        
Co-Chair Kelly announced  public testimony had been heard during the                                                            
bill's previous hearing and was concluded.                                                                                      
Co-Chair  Donley  added  that  his  intent  is  to  only  adopt  the                                                            
committee substitute  at this meeting  and hold the bill  for future                                                            
review. He invited written comments on the committee substitute.                                                                
Co-Chair  Kelly  asked what,  if any  impact  the proposals  in  the                                                            
committee substitute  would have on the annual AHFC  dividend to the                                                            
State of Alaska.                                                                                                                
JOHN   BITNEY,   Legislative   Liaison,   Alaska   Housing   Finance                                                            
Corporation,  Department  of  Revenue  testified  that  he  saw  the                                                            
committee  substitute as "legislation  that  would limit use  of the                                                            
Co-Chair Donley  clarified the $100,000  limitation only  applies to                                                            
the first  $100,000 of a  home loan. A loan  over that amount  could                                                            
still be obtained,  with the portion above the limit  accrued at the                                                            
regular interest rate, he stressed.                                                                                             
Senator Austerman commented  that public testimony should be allowed                                                            
on the changes in the committee substitute.                                                                                     
Mr. Bitney  stated  he understood  the  language to  imply that  the                                                            
corporation may  not use money to subsidize any amount  that exceeds                                                            
$100,000.  He  pointed  out  this does  not  change  other  statutes                                                            
governing  the calculation  procedure  determining  the one-percent                                                             
reduction  below the normal  rate. Therefore,  he advised,  language                                                            
reconciliation may be necessary to overcome the conflict.                                                                       
Mr. Bitney  continued, noting the  committee substitute also  limits                                                            
the corporation from issuing  loans under this program only to those                                                            
areas with  a higher cost  of living. This,  he emphasized,  changes                                                            
the program  itself and would  probably limit  the loan activity  to                                                            
the extent  that AHFC  would earn  less money  and subsequently  the                                                            
dividend would  be smaller. He qualified that because  the committee                                                            
substitute  was just released,  he had been  unable to research  the                                                            
matter fully.                                                                                                                   
Co-Chair Kelly  requested an analysis from the corporation  and that                                                            
the  witness  work  with Co-Chair  Donley  and  Senator  Hoffman  to                                                            
determine the  best way to carry out  the intent of the legislation                                                             
without drastically reducing dividend payments.                                                                                 
Co-Chair  Donley recalled  Senator Hoffman's  earlier comments  that                                                            
the existing interest rate  subsidy program is parallel to the first                                                            
time  homebuyers  program. Co-Chair  Donley  understood  there is  a                                                            
limit to  the amount  that could  be borrowed  under the first  time                                                            
homebuyers program and asked if this were correct.                                                                              
Mr. Bitney affirmed  and stated the acquisition limit  for the price                                                            
of  a home  in  Anchorage is  $179,000,  and  for areas  outside  of                                                            
Anchorage the limit is $160,000.                                                                                                
Co-Chair Donley asked if  first time homebuyers program is available                                                            
Mr. Bitney  answered it  is, but  pointed out  that the real  estate                                                            
market in many areas is  such that the first time homebuyers program                                                            
could  not be  utilized  because home  prices  are higher  than  the                                                            
maximum allowed.                                                                                                                
Co-Chair Donley stated  that while the HALF program has no financial                                                            
needs  criteria,   the  first  time  homebuyer  program   does  have                                                            
limitations if the borrower has significant assets.                                                                             
Mr. Bitney  confirmed  that as  well as  an acquisition  limit;  the                                                            
first  time  homebuyers  program   is for  low  to  moderate-income                                                             
Co-Chair Donley  asked if in light of these factors,  the first time                                                            
homebuyers program really is comparable to the HALF program.                                                                    
Mr.  Bitney responded  that  the  comparison  is shown  through  the                                                            
historical use of the program.  He informed that 85 percent of loans                                                            
issued under  the HALF program have  been made to borrowers  earning                                                            
less  than  $100,000  annually.  He stated  the  average  income  of                                                            
borrowers  under the HALF  program is  less than  that of the  urban                                                            
borrowers of the tax exemption  program. While he admitted there are                                                            
exemptions  to the  norm, such  as with  the $400,000  loan  granted                                                            
under  the  HALF program,  he  stressed  that  the program  is  used                                                            
primarily by borrowers  with similar incomes and for the purchase of                                                            
similar homes as the borrowers under the tax exemption program.                                                                 
Co-Chair  Kelly again  asked  how the  provisions  in the  committee                                                            
substitute would impact the AHFC dividend.                                                                                      
Co-Chair  Donley  stated he  wanted  an analysis  of  the  financial                                                            
ramifications of the committee substitute from AHFC.                                                                            
Senator Hoffman withdrew  his objection and the committee substitute                                                            
was ADOPTED.                                                                                                                    
Co-Chair Kelly ordered the bill HELD in Committee.                                                                              
     SPONSOR SUBSTITUTE FOR SENATE BILL NO. 149                                                                                 
     "An  Act relating  to employment  incentives  for teachers  and                                                            
     health care providers,  to reemployment of retired teachers, to                                                            
     loans  to and  loan forgiveness  for teachers  and health  care                                                            
     providers,  to awards  to teachers,  to  eligibility for  major                                                            
     medical insurance  coverage for beneficiaries  of the teachers'                                                            
     retirement  system, and to teacher certificates;  and providing                                                            
     for an effective date."                                                                                                    
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Senator  Leman  presented  the  legislation   relating  to  a  topic                                                            
discussed by the  Committee about finding incentives  to improve the                                                            
opportunity  for hiring  and rehiring  teachers held  at an  earlier                                                            
meeting.  He noted when he  first introduced  this bill it  included                                                            
health  care providers.  However,  he  said it  was  decided in  the                                                            
Senate Health, Education  and Social Services Committee to limit the                                                            
scope to teachers,  as well as deleting language that  produced high                                                            
fiscal notes.                                                                                                                   
Senator Leman  stressed the need for proactive measures  required to                                                            
obtain teachers.                                                                                                                
AT EASE 9:30 AM / 9:32 AM                                                                                                       
Senator Leman  continued with his presentation noting  that the bill                                                            
now targets three items.                                                                                                        
PAUL ROETMAN,  staff  to Senator  Leman detailed  the three  primary                                                            
elements  of the committee  substitute. He  listed the first  as the                                                            
recognition of credentials  for out of state teachers, the second as                                                            
an incentive for employment  of retired teachers through an election                                                            
option,  and  the  third as  improvement  of  medical  coverage  for                                                            
current teachers.                                                                                                               
Mr. Roetman addressed incentives  for out of state teachers as shown                                                            
in Sections  1 and  2 of the  committee substitute.  He stated  this                                                            
steam lines the process  by offering an Alaskan preliminary teaching                                                            
certificate  to an applicant with  a valid teaching credential  from                                                            
any  state, as  well  as clearance  through  a  criminal  background                                                            
check. He  noted that  the preliminary  teaching certificate  holder                                                            
would have to pass the  existing competency exam within one year and                                                            
complete  Alaska  studies  within   three  years  of  receiving  the                                                            
certificate. He said these  preliminary certificates could be issued                                                            
for special  education and  other specialties  as well. He  remarked                                                            
this procedure  would make it easier for teachers  to move to Alaska                                                            
and  quickly gain  employment.  He informed  that  a teacher,  while                                                            
employed  under  the  preliminary  teaching  certificate,  does  not                                                            
qualify for tenure.                                                                                                             
Mr.  Roetman  next  spoke  to  the  impact  of  the  legislation  on                                                            
reemployment of  retired teachers as described in  Sections 3, 4 and                                                            
6. He explained the stipulations  under which a school could declare                                                            
a teacher shortage and  subsequently hire a retired employee covered                                                            
by the Teachers Retirement  System (TRS). He detailed that a retired                                                            
TRS employee  could  elect to  continuation of  retirement  benefits                                                            
upon re-employment  as  a teacher.  He noted  additional  retirement                                                            
benefits would  not accrue and that the employee would  receive only                                                            
a salary.  He  qualified this re-employment option  is not available                                                            
for teachers,  administrators  or principals  who retired under  the                                                            
Retired  Incentive  Plan (RIP)  early  retirement program.  He  also                                                            
pointed out tenure could not be accrued by participants.                                                                        
Mr. Roetman  stated  that an  annual report  to  the legislature  is                                                            
required under  this legislation to  allow monitoring of  the impact                                                            
of the re-employment  of retired teachers on the retirement  program                                                            
itself.  In  addition,  he noted,  the  retirement  portion  of  the                                                            
legislation has a three-year  sunset clause in the event the teacher                                                            
shortage situation changes.                                                                                                     
Mr.  Roetman listed  the third  element  of the  legislation,  which                                                            
increases  medical benefits  to 100 percent  coverage for a  teacher                                                            
who worked  25 years  rather than  20 years. He  stated current  law                                                            
provides  for medical benefits  on an age-determined  basis  only; a                                                            
TRS member  must  be 65 years  of age  or older  to begin  receiving                                                            
coverage.   He  commented  the  intent   of  this  portion   of  the                                                            
legislation  is  to increase  retention  of  teachers  by  providing                                                            
additional medical benefits available at an earlier age.                                                                        
Senator  Hoffman  asked  if  there  are  incentives   for  part-time                                                            
teachers to help cover the teacher shortages.                                                                                   
Mr. Roetman  replied  the incentives  are for  full time  employment                                                            
Senator Green  asked the same question and Mr. Roetman  affirmed his                                                            
AT EASE 9:37 AM / 9:39 AM                                                                                                       
Mr.  Roetman  corrected   his  earlier  testimony   and  stated  the                                                            
retirement  re-employment incentive  extends to retirees  who accept                                                            
part time teaching employment as well as full time employment.                                                                  
MELISSA  HILL,  Alaska  Teacher  Placement  Program,  testified  via                                                            
teleconference  from Oklahoma,  that  the Program  is "on the  front                                                            
lines of  recruiting". She  told how the Program  works with  the 53                                                            
school  districts   in  the  state  as  well  as  teachers   seeking                                                            
information   regarding  employment   in   Alaska.  Therefore,   she                                                            
surmised,  the  Program has  a  unique perspective  on  the  teacher                                                            
shortage both instate and nationally.                                                                                           
Ms. Hill listed several facts as follows.                                                                                       
     Over the previous five years, there has been a decline                                                                     
     nationally of students pursuing careers in education.                                                                      
     Many states, upon realizing this, began proactive approaches                                                               
     and raised teacher salaries.                                                                                               
     Those states that  did not take these measures and are now in a                                                            
     reactive  phase, have  adopted measures  that include,  but are                                                            
     not limited  to, hiring incentives  - some as high as  $10,000,                                                            
     housing allowances,  loan forgiveness programs  and alternative                                                            
     certification procedures.                                                                                                  
Ms. Hill encouraged  the Committee to consider all  three components                                                            
of  this  legislation,  asserting  they  are  only  a  small  effort                                                            
compared to other states' activities.                                                                                           
Ms. Hill  remarked  the preliminary  certification  of out of  state                                                            
teachers is the program's  highest priority, and would assist in the                                                            
certification process for both school districts and educators.                                                                  
Ms. Hill expressed  that the employment of retired  teachers "brings                                                            
experience and mentors into the classroom."                                                                                     
Ms. Hill stated  the increase in medical  benefits is "just  a small                                                            
component"  compared to the  efforts of other  states. She  stressed                                                            
that any incentives would be helpful.                                                                                           
Ms.  Hill  told the  Committee  she  was  attending  a job  fair  in                                                            
Oklahoma with  representatives from 11 Alaska School  Districts. She                                                            
said that the  districts in urban  areas, such as Anchorage  and the                                                            
Kenai Peninsula  are conducting some  interviews. However,  she said                                                            
the rural school  districts were having a difficult  time recruiting                                                            
for the  up to 30 vacant  positions in their  districts. She  warned                                                            
that the  teacher shortage  would get worse  before it improves  and                                                            
stressed the need to certify  and hire qualified teachers in Alaska.                                                            
To not  do so, she  cautioned, would  not give  "justice to  Alaskan                                                            
DEBBIE OSSIANDER,  Legislative  Chair and  Member, Anchorage  School                                                            
Board testified  in Juneau in support of the legislation.  She spoke                                                            
of  "acute shortage  areas"  within  the Anchorage  School  District                                                            
(ASD)  that  extended  beyond  teachers  to  special  education  and                                                            
related  services,  librarians, foreign  language  teacher  experts,                                                            
math and  science teachers  and music specialists.  She stated  that                                                            
the district  has had to  contract with private  firms, at  a higher                                                            
cost, to provide some special education services.                                                                               
Ms. Ossiander  told of requests to  the Department of Education  and                                                            
Early  Development  for  flexibility   in  accepting  out  of  state                                                            
teaching certificates for provisional certification in Alaska.                                                                  
Ms.  Ossiander  stated  the problems  associated  with  the  current                                                            
process of issuing the waivers for special education teachers.                                                                  
Ms. Ossiander  expressed the high priority the ASD  Board has placed                                                            
on establishing  a  system to re-employ  retired  TRS teachers.  She                                                            
informed  of  the  high  standards  required  to  obtain  an  Alaska                                                            
teaching  certificate  and  because  of  this, the  length  of  time                                                            
involved in meeting the requirements.                                                                                           
Ms. Ossiander said the  increased medical benefits opportunity would                                                            
provide an incentive the  ASD could offer retired teachers to return                                                            
to work.                                                                                                                        
Co-Chair Kelly asked Ms. Ossiander's professional credentials.                                                                  
Ms. Ossiander  replied she is a certified respiratory  therapist who                                                            
has  become  "a  quasi  education  specialist"   over  her  ten-year                                                            
involvement with the school board.                                                                                              
Co-Chair   Kelly    referenced   SB   86,   regarding   alternative                                                             
certification and recalled  previous Committee discussions about the                                                            
fear  that   communities  would  opt   for  retired  teachers   over                                                            
alternative certification  of professionals in other fields entering                                                            
teaching with a preliminary teachers certificate.                                                                               
Co-Chair  Kelly  gave Senator  Leman  as an  example  of a  Stanford                                                            
University  educated  engineer,  with  14 years  experience  in  the                                                            
legislature  "explaining  things to  people" and  who is willing  to                                                            
teach.  Co-Chair  Kelly  wanted  to  know  if  a  recently  educated                                                            
certified teacher would get preference.                                                                                         
Ms. Ossiander  expressed she supported  SB 86, giving an  example of                                                            
foreign  language immersion  programs  and the  opportunity to  have                                                            
certificated  teachers  fluent  in  such  languages.  She  requested                                                            
school  districts  be  given  flexibility   to  obtain  and  certify                                                            
available  specialists.  She  predicted  the  districts  would  find                                                            
highly qualified professionals  in their field to offer higher-level                                                            
education of math, music and other subjects.                                                                                    
Co-Chair  Kelly appreciated  Ms. Ossiander  was  not a professional                                                             
educator,  citing  the need  for community  member  involvement.  He                                                            
commented that retired  teachers were easy to rehire but that school                                                            
districts  should   also  think  about  hiring  professionals   with                                                            
expertise  in their field.  He stated  that SB 86  is an attempt  to                                                            
"think outside  of the box"  and SB 149  offers a "more utilitarian                                                             
answer  to a pressing  problem"  that still  allows for alternative                                                             
solutions to the teacher shortage.                                                                                              
Ms. Ossiander  qualified she is not directly involved  in individual                                                            
hiring  decisions, but  said  she would  convey to  the other  board                                                            
members the importance  of having a teacher in the  classroom who is                                                            
"extremely  capable  and  qualified  in  the  subject  that  they're                                                            
Senator Hoffman  assessed this legislation  as helpful in  solving a                                                            
short-term problem. However,  he cited lowered attendance at teacher                                                            
job  fairs since  1997  and asked  the  witness for  suggestions  in                                                            
addressing the long-term problem.                                                                                               
Ms.  Ossiander  replied,  "I  think  that there  is  no  one  simple                                                            
answer," as evident  by the different legislation  pertaining to the                                                            
issue. She  expressed she is encouraged  by the increased  per pupil                                                            
allocation in  the foundation funding formula as it  would allow the                                                            
district to hire and maintain qualified teachers.                                                                               
AT EASE 9:54 AM / 9:59 AM                                                                                                       
Senator  Green  recalled  concerns  about  the  rehire  of  a  state                                                            
employee,  including a legislator,  and  the possible complications                                                             
associated with participation in another retirement package.                                                                    
ALISON  ELGEE, Deputy  Commissioner,  Department  of Administration                                                             
explained  that  currently  a retired  Public  Employees  Retirement                                                            
System (PERS) member who  takes a job as a teacher, or a retired TRS                                                            
member  who takes  a  job in  a PERS  position,  would  not have  to                                                            
suspend  receipt  of retirement  benefits  since  that  employee  is                                                            
entering   different  retirement   plan.  However   she  noted   the                                                            
certification requirements  necessary to obtain a teaching position.                                                            
Ms. Elgee suggested if  the intent is to allow a retired PERS member                                                            
to become a  teacher, clarification  language should be inserted  in                                                            
the  legislation   to  stipulate  whether  that  employee,   with  a                                                            
preliminary  certification, is to  be covered by TRS or continue  to                                                            
be eligible  to receive PERS retirement  payments. She noted  that a                                                            
public  employee   must  be  covered   under  a  benefit   plan  and                                                            
recommended PERS as a default in these instances.                                                                               
Co-Chair  Kelly asked  if at  the point  the teacher  becomes  fully                                                            
certified, the employee is then covered under TRS.                                                                              
Ms. Elgee affirmed  TRS is the appropriate system  for a teacher who                                                            
has fulfilled all requirements for becoming fully certified.                                                                    
Senator Green  shared a conversation she overheard  about the desire                                                            
to  hire retired  PERS  members as  teachers  at the  University  of                                                            
Alaska. She asked what system the university participates in.                                                                   
Ms. Elgee  listed  classified staff  as PERS  members and  certified                                                            
staff  as  TRS  members.  She  noted  there   is  also  an  optional                                                            
retirement plan available to teachers.                                                                                          
Co-Chair  Kelly understood  the Department  of  Education and  Early                                                            
Development might have contradictory information on the subject.                                                                
BRUCE  JOHNSON,  Deputy Commissioner  of  Education,  Department  of                                                            
Education and  Early Development stated a determination  made during                                                            
the creation of SB 36,  from the Twentieth Alaska State Legislature,                                                            
specified that  a "subject matter  specialist" would have  a teacher                                                            
certificate.  He cited  language from  that legislation,  "A  person                                                            
employed  as a  subject  matter expert  teacher  … is  considered  a                                                            
certificate employee" for purposes of TRS.                                                                                      
Senator Green  assured she was not attempting to "muddy  the waters"                                                            
on either  SB  86 or  SB 149,  but pointed  out this  was a  problem                                                            
presented and that the  manner of transferring from PERS to TRS, for                                                            
both school districts  and the university, should  be clarified. She                                                            
assumed there were provisions  allowing a retired PERS or TRS member                                                            
to instruct at the University of Alaska on a part time basis.                                                                   
Ms.  Elgee affirmed  a  public employee  could  work  in a  separate                                                            
field, as long  as the new position is eligible to  participate in a                                                            
retirement system different  than the one the employee retired from.                                                            
Senator  Hoffman asked  if the  employee  would have  to "start  all                                                            
over" to become vested in the new retirement program.                                                                           
Ms.  Elgee   answered  that  is  correct   and  noted  the   vesting                                                            
requirement for TRS is eight years.                                                                                             
Mr. Johnson  testified the  "department has  been excited about  the                                                            
concepts" presented,  and judges SB 149 to be good  legislation that                                                            
would  provide  "additional  tools"  to ensure  the  most  qualified                                                            
individuals  are employed as teachers  in Alaska. He reaffirmed  the                                                            
situation is acute,  that job fairs are attracting  fewer applicants                                                            
and that Alaskans could be recruited as teachers.                                                                               
Mr. Johnson  added the  department's support  for the acceptance  of                                                            
teacher   certificates    from   other   states   for   preliminary                                                             
certification.  He expressed, "That makes good sense  and eliminates                                                            
tremendous barriers that we've had up to this point in time."                                                                   
Mr. Johnson noted  the Alaska State Board of Education  had recently                                                            
adopted preliminary certification  regulations similar to the intent                                                            
of the bill.                                                                                                                    
Senator Green  asked if an employee retired under  PERS, who becomes                                                            
a teacher,  could elect to  not participate  in TERS. She  predicted                                                            
this could save the school districts money.                                                                                     
Ms. Elgee  responded that  currently a full  time employee  does not                                                            
have the election  to not participate  in the applicable  retirement                                                            
system.  She noted  that  the re-hire  provisions  in  the bill  for                                                            
retired TRS members do  give the option to not participate, but that                                                            
retired PERS  members would  be required to  participate in  the TRS                                                            
Co-Chair  Kelly pointed  out  that by  requiring  these teachers  to                                                            
participate, they are actually  contributing to the retirement fund.                                                            
He stated this is a long-term advantage of the fund.                                                                            
Senator  Leman offered  a motion to  move SS SB  149 from  Committee                                                            
with  accompanying Department  of  Education and  Early Development                                                             
zero  fiscal   note  and   fiscal  note   from  the  Department   of                                                            
Administration for $50,000.                                                                                                     
SFC 01 # 85, Side B 10:13 AM                                                                                                    
There was no objection and the bill MOVED from Committee.                                                                       
     CS FOR SENATE BILL NO. 161(JUD)                                                                                            
     "An  Act relating  to the  withholding of  salary of  justices,                                                            
     judges,  and  magistrates;  relating  to  prompt  decisions  by                                                            
     justices,  judges, and  magistrates; and  relating to  judicial                                                            
     retention  elections for judicial  officers; and providing  for                                                            
     an effective date."                                                                                                        
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Co-Chair  Donley testified  this bill amends  the current  timeframe                                                            
guidelines governing  when the judicial branch must  issue decisions                                                            
in court cases.  He detailed statute  in place since statehood  that                                                            
requires judges  and justices to produce a proposed  decision within                                                            
six months  of the last argument on  a case. He noted that  there is                                                            
no time requirement for  rendering a final decision and as a result,                                                            
several cases have been  pending for over two years and one case for                                                            
over three years.                                                                                                               
Co-Chair Donley  asserted, "justice  delayed is justice denied"  and                                                            
that two years is too long  for Alaskans to wait for a decision from                                                            
the Supreme Court.                                                                                                              
Co-Chair Donley  explained this legislation would  add another "six-                                                            
month  tier" to  the  existing  system to  hold  multi-judge  courts                                                            
accountable  for issuing "reasonable  decisions within a  reasonable                                                            
amount of time." He noted  an additional two months would be allowed                                                            
in times  when a  justice vacates  the panel  and a  new justice  is                                                            
appointed.  He stated  citizens could  therefore  expect a  decision                                                            
within  one year,  or  14 months  if  there was  a change  in  panel                                                            
membership, after  the completion of all arguments  and pleadings in                                                            
a case. He  surmised this is more  than an adequate amount  of time.                                                            
Co-Chair Donley shared  that the position of the judiciary branch is                                                            
that the existing  law is unconstitutional. The reason,  he said, is                                                            
because it  is improper for the legislature  to set such  deadlines.                                                            
However, he stressed  this law was established at  statehood and has                                                            
been followed since that time, which sets a precedence.                                                                         
Co-Chair Donley also noted  Section 1 of the legislation adds to the                                                            
existing  law that  provides the  content of  the Official  Election                                                            
Pamphlet (OEP).  He shared that the  current procedure designates  a                                                            
page in the  OEP detailing various  information about each  judge up                                                            
for retention confirmation.  He stated this legislation requires the                                                            
voter's guide  to also include  information  as to whether or  not a                                                            
judge has complied  with the timeframe requirements  as specified in                                                            
this legislation.                                                                                                               
Co-Chair Donley  explained the process of having a  judge complete a                                                            
salary warrant  each pay period indicating  whether the judge  is in                                                            
compliance  with that law.  He stated  that if the  judge is  not in                                                            
compliance,  the salary is  withheld. He  noted there are  currently                                                            
some judges  that are not getting  paid under the existing  statute.                                                            
He surmised the  public should have knowledge of this  when deciding                                                            
whether to retain a judge.                                                                                                      
Senator Olson  pointed out it actually takes longer  than six months                                                            
to  appoint and  confirm  a new  judge.  Therefore he  surmised  the                                                            
additional two months for  multi-paneled courts would be inadequate.                                                            
He asked how the  deadline would be justified when  there is an even                                                            
number of Supreme Court justices seated.                                                                                        
Co-Chair Donley responded  it would be an issue only if there were a                                                            
significant  period  of  time  a seat  was  vacant.  He  stated  new                                                            
justices  are appointed "fairly  promptly".  Regardless of  this, he                                                            
pointed out,  the court can issue  decisions with only four  members                                                            
seated. He  continued that in this  instance, there would  only be a                                                            
problem if the  court deadlocked in a 2-2 vote. He  posed a scenario                                                            
of a  court  that took  the entire  six months  allowed  to issue  a                                                            
preliminary  ruling and after six  more months passed a member  left                                                            
the bench  without  a final  ruling issued  and  the remaining  four                                                            
justices  were tied in  their opinion. He  surmised the statistical                                                             
probably  of this worst possible  scenario  was small. He stated  if                                                            
this were a  concern, he would support  adding another month  on the                                                            
extension,  giving the  court  a possible  nine months  in which  to                                                            
render   a  decision   if   one  member   left  the   bench   during                                                            
Co-Chair  Kelly noted  that  current law  already  applies to  these                                                            
Co-Chair Kelly  asked the length of  time it could take for  a court                                                            
to  render a  final decision  if  there were  a vacancy  during  the                                                            
Co-Chair  Donley replied the  governor could  appoint a new  justice                                                            
within  a month,  leaving  one month  for the  new court  to make  a                                                            
Senator Ward  noted that candidates  for public office are  given an                                                            
opportunity  in the voter's  pamphlet to  explain, "something  we've                                                            
done or  not done".  He asked if  judges up for  retention have  the                                                            
same  option  and  could therefore  explain  why  their  salary  was                                                            
Co-Chair Kelly  replied that the judges  do make statements  printed                                                            
in the voter's guide.                                                                                                           
Co-Chair  Kelly referred  to Co-Chair  Donley's  statement that  the                                                            
courts consider  the existing law unconstitutional  and asked for an                                                            
Co-Chair  Donley  explained  that  the administrator  of  the  court                                                            
system, not speaking  for the Supreme Court, has taken  the position                                                            
that the existing  law is a violation  of the separation  of powers.                                                            
He noted  that neither the  Supreme Court  nor the Attorney  General                                                            
have issued opinions on the matter.                                                                                             
Co-Chair Kelly asked how many other states have similar laws.                                                                   
Co-Chair Donley  was unsure, but stated that at least  two courts in                                                            
jurisdictions outside Alaska  found similar laws to be infringements                                                            
of the  separation of  powers. He  stated other  courts have  upheld                                                            
statutes withholding legislators'  salaries in the case of a failure                                                            
to produce  a budget within  a specified time  period. He noted  the                                                            
inconsistencies  between  a court  ruling  in favor  of withholding                                                             
legislators'   salaries,   but  ruling  as   unconstitutional,   the                                                            
withholding of judges' salaries.                                                                                                
Co-Chair  Kelly  commented  in defense  of  Alaska's  court  system,                                                            
informing  there is no  choice as  to which cases  are accepted.  He                                                            
stated  that the  caseload is  therefore  higher in  Alaska then  in                                                            
other states.                                                                                                                   
Co-Chair  Donley responded  this is one of  the arguments raised  by                                                            
the court administrator.                                                                                                        
CHRIS  CHRISTENSEN,  Deputy Administrative  Director,  Alaska  Court                                                            
System, testified  the purpose of  this legislation is to  encourage                                                            
timeliness and  eliminate unnecessary delays in decision-making  and                                                            
minimize  delays.  He  assured  that the  Chief  Justice  and  other                                                            
members  of the  Supreme  Court share  this  concern  and have  been                                                            
taking "major  steps" in  the last few years  to address  timeliness                                                            
Mr. Christensen  detailed  that in  the previous  year, the  Supreme                                                            
Court  adopted very  detailed time  standards for  trial courts.  He                                                            
defined a time  standard as a quantifiable goal for  the delivery of                                                            
court services  and noted that different time standards  are adopted                                                            
for  different types  of  cases. He  pointed  out the  Alaska  Court                                                            
System computer  system is  antiquated, but  the intent is  to start                                                            
issuing quarterly  reports to the  legislature later in the  year on                                                            
the achievement of these time standards.                                                                                        
Mr. Christensen  also noted that the previous October  federal funds                                                            
were used  to train  all judges  on case management  techniques.  In                                                            
addition,  he said,  the  judicial branch  established  a  mentoring                                                            
program so  the judges  who are particularly  efficient in  managing                                                            
their caseloads  could advise  those who are  not and those  who are                                                            
new to the bench.                                                                                                               
Mr. Christensen  reminded the Committee the Chief  Justice announced                                                            
during her State of the  Judiciary speech, that the Supreme Court is                                                            
also committed  to shortening times  for appellate cases.  He shared                                                            
that approximately  two weeks before  this bill was introduced,  the                                                            
Supreme Court  did adopt  time standards  for appellate court  cases                                                            
and new procedures for  flagging and monitoring cases that are being                                                            
delayed so that individual cases don't languish.                                                                                
Mr. Christensen  emphasized this is  very unusual and that  while it                                                            
was common  in  other states  for the  Supreme Court  to adopt  time                                                            
standards for  the trial courts, it  is "almost unheard of"  for the                                                            
Supreme Court to adopt time standards for its own operations.                                                                   
Mr. Christensen  summarized  that timeliness  is an issue  requiring                                                            
attention and that the  Alaska Court System has been actively taking                                                            
steps to address it. He  expressed, "We're optimistic that we'll see                                                            
continued  improvements.  That  being said,  the court  system  does                                                            
strongly oppose SB 161."                                                                                                        
Mr. Christensen stated  that because the Supreme Court and the Court                                                            
of Appeals  are actually  committees,  the six-month  rule  operates                                                            
differently for them. He  explained how a judge or justice seated on                                                            
one  of these  courts  is assigned  to  the  task of  authoring  the                                                            
majority  decision  and  has  six  months  to  do  so.  However,  he                                                            
stressed, the opinion itself  is subject to negotiation and revision                                                            
by the  other majority members  and is subject  to having a  dissent                                                            
written, all of which may take additional time.                                                                                 
Mr. Christensen told how  this law dates to 1959, and that every two                                                            
weeks since  statehood, every  judicial officer  in the state,  from                                                            
the Supreme Court down  to the magistrates, has to sign an affidavit                                                            
before they  get a paycheck.  He pointed out  there are over  20,000                                                            
state employees  that all have jobs to do and that  this is the only                                                            
group of state  employees who have paychecks withheld  if they could                                                            
not certify they are not behind on their work.                                                                                  
Mr. Christensen  affirmed  that as Senator  Donley pointed  out, the                                                            
court   administration   view   is   that  the   existing   law   is                                                            
unconstitutional   and  would  not  survive  legal  challenge.   Mr.                                                            
Christensen asserted it  has been followed for 40 years, not because                                                            
it is  constitutional  but simply  as a  matter of  respect for  the                                                            
reasonable  wishes of a coordinate  branch of government.  He stated                                                            
the legislature  is the funding authority  and that the legislature                                                             
has expressed  a desire that  cases are resolved  within six  months                                                            
and also that  the legislature historically has provided  a level of                                                            
funding through  the judiciary branch to handle these  cases in that                                                            
timeframe. Therefore, he  concluded, it would be unreasonable to not                                                            
respect those wishes.                                                                                                           
Mr. Christensen  detailed  that in  the previous  fiscal year  there                                                            
were approximately  150,000  new cases  filed in  the court  system.                                                            
That same year, he informed,  about 150,000 old cases were disposed,                                                            
which he  commented  is a lot  of cases. Mr.  Christensen  continued                                                            
that during  the previous year there  were 25 occasions in  which an                                                            
individual  judge or justice  could not sign  the pay affidavit  and                                                            
subsequently  had a paycheck  withheld. He  surmised that 25  delays                                                            
out of 150,000  cases, under the performance measure  established by                                                            
the legislature,  is a fairly good record. He predicted  the average                                                            
time period  would still be reduced  with the implementation  of the                                                            
new time standards.                                                                                                             
Mr. Christensen explained  the current law would not survive a legal                                                            
challenge  is based on events  in other states.  He estimated  there                                                            
are six states that take  a judge's paycheck if assigned work is not                                                            
completed within  a certain amount of time. He added  that such laws                                                            
have been  challenged  not by the  court system,  but by  individual                                                            
judges, in three  states: Nevada, Montana and Wisconsin.  Each time,                                                            
he stated,  the law was thrown out  for reasons directly  applicable                                                            
to the Alaska Constitution, which he described as follows.                                                                      
Mr.  Christensen   elaborated   the  first   issue  that,   Alaska's                                                            
Constitution, the constitutions  of the three aforementioned states,                                                            
and  most  other  state   constitutions,  provide   that  a  judge's                                                            
compensation  shall  not be  diminished during  the  term of  office                                                            
except  by  a  general  law  applied  to  all  state  employees.  He                                                            
remarked,  "Money has  a time value.  When you  take away a  judge's                                                            
paycheck  for a period of  time that has  the effect of diminishing                                                             
it." He  cited the record  set 20 years ago  by an Anchorage  judge,                                                            
who was  carrying an active  caseload of 800  cases, and because  of                                                            
one  divorce case  involving  a court  employee,  that  judge had  a                                                            
paycheck withheld  for over four months.  Mr. Christensen  asserted,                                                            
"It's difficult  to argue that holding somebody's  paycheck for more                                                            
than  four  months  is not  a  diminishment  as  prohibited  by  the                                                            
Mr. Christensen  next detailed  how, under  our state constitution,                                                             
the  Supreme  Court   and  not  the  legislature  is   charged  with                                                            
administering the judicial  branch. He commented the six-month rule,                                                            
as currently in effect  is, "a form of micro-management that goes to                                                            
the very heart  of the Supreme Court's  authority to administer  our                                                            
branch. It  applies to the work of  every judge, every day  in every                                                            
Mr. Christensen  told  the Committee  there  are a  number of  court                                                            
cases from  other states  in which  the courts  have considered  the                                                            
general question of whether  the legislature could set timelines for                                                            
the courts to  do their work. He noted these are cases  in which the                                                            
legislature  sets  timelines  but  that  they  do  not  involve  the                                                            
withholding  of  a  judge's  paycheck.  He stated  the  majority  is                                                            
"overwhelming,  about 15  to one,"  that setting  timelines for  the                                                            
judiciary  is  a "violation  of  fundamental  separation  of  powers                                                            
doctrine." He  explained there is a rule of constitutional  law that                                                            
one branch  can't set a timeline for  another branch to carry  out a                                                            
constitutional   function.  Deciding   cases,  he  informed,   is  a                                                            
constitutional  power of the courts not a statutory  power. He noted                                                            
this rule is generally  invoked to protect legislative and executive                                                            
branches  from timelines  set in  court cases  although "rules  like                                                            
this work both ways."                                                                                                           
Mr.   Christensen   clarified   that   notwithstanding   the   court                                                            
administration's  longstanding   belief  that the  existing  law  is                                                            
unconstitutional,  the  court system  as an institution,  has  never                                                            
complained  to  the  legislature.  He noted  that  he  does  receive                                                            
complaints occasionally  from individual judges but, "our answer has                                                            
always been the  same: if you don't like the law,  then file a suit.                                                            
Otherwise comply with it."                                                                                                      
Mr. Christensen  asserted SB 161 is  too far reaching and  is likely                                                            
to  result in  a challenge  to  the underlying  six-month  rule.  He                                                            
surmised that given the  case law in other states, the rule would be                                                            
struck down.  He shared that  as an administrator,  he supports  the                                                            
six-month  rule as it currently  pertains to  the trial courts,  but                                                            
does not  support the expansion  to apply  to the Supreme Court  and                                                            
the Court  of  Appeals. He  explained how  if the  assigned  justice                                                            
fails to present a majority  decision within six months and the full                                                            
court is  unable to release  a final decision  within the 12  months                                                            
allocated  in  the  bill,  all members  of  that  court  lose  their                                                            
paycheck.  In essence,  he stated,  an individual  judge or  justice                                                            
could be performing  duties in a timely  manner yet have  a paycheck                                                            
withheld if a  colleague has taken too long. He stressed  that there                                                            
are  "serious  constitutional  problems"  involving both  the  equal                                                            
protection  clause  and the  impairment  of contract  clause,  which                                                            
relates to taking one state  employee's paycheck because a different                                                            
state employee has not done their work on time.                                                                                 
Mr. Christensen  stated,  "Constitutional issues  aside, this  is an                                                            
issue of fundamental fairness.  The bill proposes to take a paycheck                                                            
from  someone  because  of circumstances  beyond  their  control.  A                                                            
person could be  performing the duties of the office  diligently and                                                            
efficiently  and  in a  timely manner  and still  be  deprived of  a                                                            
paycheck because  of something someone  else didn't do."  He relayed                                                            
an instance where a justice  was hospitalized and the progression of                                                            
cases was delayed as a result.                                                                                                  
Mr. Christensen  surmised the question ultimately  is what harm this                                                            
bill is  trying to prevent.  Currently, he  reported, there  are 465                                                            
cases  in front  of the  Supreme  Court of  different  types and  in                                                            
various  stages of  completion.  Of this  amount,  he disclosed,  20                                                            
cases are more  than one year old, which he calculated  as less than                                                            
five percent.  He assured he did not  want to make excuses  and that                                                            
the Chief Justice agrees that 20 overdue cases is too many.                                                                     
Mr.  Christensen  stressed there  is  a reason  the  court does  not                                                            
always  resolve  cases as  quickly  as desired.  He  stressed  that,                                                            
unlike  most Supreme  Courts,  the  Alaska Supreme  Court  is not  a                                                            
Certiorari  (cert)  court with  regards to  the civil  caseload.  He                                                            
defined  cert court  as having discretion  as to  reject cases,  and                                                            
thus control  the caseload.  In contrast,  he explained, the  Alaska                                                            
Supreme  Court  must  hear  and decide  every  civil  case  that  is                                                            
appealed to it, regardless  of the merits of the case and regardless                                                            
of the significance of the issues to the public at large.                                                                       
Mr. Christensen  gave comparisons  of the caseloads of several  cert                                                            
courts to the  Alaska Supreme Court. He stated the  US Supreme Court                                                            
is a cert court with nine  justices to share the workload of issuing                                                            
86 written  opinions  in the  previous year.  He noted  this is  the                                                            
number of cases  the US Supreme Court determined it  could decide in                                                            
the time period.  He then pointed out three states  close to Alaska:                                                            
also have cert courts.  He listed the California Supreme Court, with                                                            
seven justices, issued  written opinions in 88 cases during 1999. He                                                            
pointed  out this  is an  average  of 13  opinions  per justice.  He                                                            
continued with  the Oregon Supreme  Court noting the seven  justices                                                            
issued 98 opinions  during the same  time period at 14 per  justice,                                                            
and the Washington  Supreme Court with nine judges,  issued opinions                                                            
on 148 cases  at 16 per justice. In  contrast, he informed  that the                                                            
Alaska Supreme Court with  only five members issued written opinions                                                            
on 153 cases, at an average  of 31 per justice, which he stressed is                                                            
twice the number  of written opinions issued by the  other courts in                                                            
that are able to control the workload.                                                                                          
Mr. Christensen  asserted that in order to guarantee  that all cases                                                            
leave the  Alaska Supreme  Court within 12  months, the court  would                                                            
need  to  change  to  a  cert  court,   as  has  been  done  in  the                                                            
aforementioned  states. He explained  the process of creating  a new                                                            
intermediary court  of civil appeals, as has been  done in the other                                                            
three  states. He  pointed out  the legislature  established such  a                                                            
court  about 20  years ago  to address  criminal  cases because  the                                                            
state Supreme Court caseload became too great.                                                                                  
Mr. Christensen  noted the Alaska Court System fiscal  note for this                                                            
bill  reflects  the cost  establishing  an  intermediary  court.  He                                                            
qualified  that the  legislation has  an effective  date of 2004  so                                                            
this court would not need  to be created immediately. He surmised it                                                            
is unlikely  the legislature would  expend the money to establish  a                                                            
new appeals  court to  speed up  the Supreme  Court's caseload  when                                                            
only less than  five percent of that caseload is over  one year old.                                                            
Mr.  Christensen  shared  that the  20  cases  open after  one  year                                                            
typically exist  because they are more complex, involve  more issues                                                            
and  are more  likely to  have  a split  decision,  which he  stated                                                            
require  dissenting  opinions  to  be  written  after  the  majority                                                            
opinion is issued. At that  time, he continued, the majority opinion                                                            
is rewritten to include a response to the dissenting opinion.                                                                   
Mr. Christensen  added that  some overdue cases  exist because  of a                                                            
turnover  in the  court.  He pointed  out that  three  seats on  the                                                            
Alaska Supreme  Court turned  over in the  last five years  and that                                                            
unlike  trial courts,  the existing  caseload is  not reassigned  to                                                            
other courts while a seat  is vacant or a justice has an illness. He                                                            
stressed that  this legislation would not eliminate  these problems.                                                            
He  asserted,  despite the  court's  best  efforts and  despite  its                                                            
success in  getting the average  case resolved  in less time,  there                                                            
would always be a few cases that take longer than a year.                                                                       
Mr. Christensen  remarked if SB 161  were in statute in fiscal  year                                                            
2000, no member of the  court would have received a paycheck for the                                                            
entire year  in spite of  the number of  written opinions issued  at                                                            
twice the rate  of other states. He asserted if the  bill became law                                                            
today, all  members of the Supreme  Court would lose their  paycheck                                                            
Mr. Christensen  opined the matter is made worse with  the inclusion                                                            
of Sections  3 and 5 of  the legislation,  which changes the  way in                                                            
which the six-month  rule is calculated. He detailed  that currently                                                            
when a case goes  before the Supreme Court or the  Court of Appeals,                                                            
the parties  have  the option  of requesting  an  oral argument.  He                                                            
described that  currently when the  court hears an oral argument,  a                                                            
conference  is held immediately following  the arguments,  a vote is                                                            
taken and the  opinion is assigned, whereby the six-month  timeframe                                                            
begins. If no  oral argument is requested, he continued  the opinion                                                            
is assigned at  the point and time when an oral argument  would have                                                            
occurred.  He stated  this means  all parties  are treated  equally,                                                            
whether or not  an oral argument is presented. Under  the bill if no                                                            
oral argument  is requested the six-month  rule begins immediately,                                                             
which results in the loss of two of the allocated six months.                                                                   
Mr. Christensen  noted there are technical  problems with  the bill,                                                            
but stated  he would not address these  specifically because  fixing                                                            
them would  not make the existing  law constitutional and  would not                                                            
resolve the constitutional problems with the bill itself.                                                                       
Mr. Christensen  reiterated the bill is not constitutional  and that                                                            
this has not  been refuted in two  hearings of the Senate  Judiciary                                                            
Committee  nor has the  Division of Legislative  Legal and  Research                                                            
Services issued an opinion to the contrary.                                                                                     
Mr.    Christensen    continued   that    in    addition   of    the                                                            
unconstitutionality  of the  legislation, the  bill makes  statutory                                                            
changes  that "are  simply  unfair," by  punishing  people who  have                                                            
completed their  work. He hoped these  two facts would be  enough to                                                            
give  the  Committee  pause.  If not,  he  requested  the  Committee                                                            
perform a  risk analysis.  He shared that  as a court administrator                                                             
who does not want  to lose the existing six-month  rule, he has done                                                            
a risk analysis  and found that if this bill were  to become law and                                                            
survived challenge, the  only achievement would be 20 cases resolved                                                            
more quickly.  He warned if the bill became law and  was struck down                                                            
under challenge,  the existing six-month  rule for all courts  would                                                            
be lost. He  surmised that with the  removal of the six-month  rule,                                                            
"human  nature" would  dictate that  the progression  of the  annual                                                            
150,000 trial court cases would slow considerably.                                                                              
Mr. Christensen concluded  by stating, "I've done the math and quite                                                            
frankly, SB 161 scares me."                                                                                                     
Co-Chair  Donley  asked what  would  be the  position  of the  court                                                            
administration   if  the  legislature  adopted  state   policy  that                                                            
appellate courts  should produce their opinions within  one year. He                                                            
pointed out this  policy could be violated by the  courts, but would                                                            
serve as a guideline.                                                                                                           
Mr. Christensen  responded legislatures set many statutory  policies                                                            
for the  courts that  establish  specific timelines  for  individual                                                            
types  of  cases.  He  noted  that many  of  these  laws  have  been                                                            
overturned  in other states and that  no challenge has been  brought                                                            
for  the Alaska  statutes.  He  deemed  SB 161  as  setting  policy,                                                            
although  the courts have  followed legislative  policy for  several                                                            
Co-Chair  Donley restated  his suggestion  adding the statute  would                                                            
stipulate  guidelines but  that salary  would not  be withheld  as a                                                            
penalty.  He explained  this  would set  a goal  for  the courts  to                                                            
achieve  and  provide  notification  in  the voter's  guide  if  the                                                            
guidelines are not followed.                                                                                                    
Mr. Christensen  replied the legislature  has authority to  set such                                                            
policy  and that  as the  funding authority  it  is reasonable  make                                                            
expressions of policy to  the Alaska Court System. He commented that                                                            
when  the legislature   expresses  a policy  and  provides  adequate                                                            
funding so  the courts could  meet the guidelines,  he expected  the                                                            
courts to "make a sincere effort" to follow them.                                                                               
Co-Chair  Donley requested  the court administration's  position  on                                                            
Section 1 of the bill regarding  publication of a judge's compliance                                                            
with the guidelines in the voter's pamphlet.                                                                                    
Mr. Christensen  responded  there are two  types of information  the                                                            
bill instructs  the courts  to provide, how  many times a judge  has                                                            
had a paycheck  withheld info on how  many times judge has  paycheck                                                            
withheld and a breakdown  of the amount of time each judge has taken                                                            
to  render  a  decision  in  each  case.  He  detailed   the  salary                                                            
information is already  compiled and available upon request and that                                                            
the legislature could require  it to be printed in the OEP. He noted                                                            
however, the Department  of Administration has advised  that release                                                            
of this information violates  the state personnel laws, although the                                                            
court  administration   disagrees.   He  addressed   the   breakdown                                                            
requirement  emphasizing the court's  current computer system  could                                                            
not  accommodate   this  task.  He   noted  the  new  system   could                                                            
"conceivably"  accomplish this once it is online,  which would be in                                                            
three  years. He  informed that  judges  "get dozens  and dozens  of                                                            
orders across their desk  every day and most of them are no-brainers                                                            
that you sign a minute  after you've read it." He was unsure whether                                                            
this collection  of  information would  be of any  value since  most                                                            
items are completed within the first four-month breakdown.                                                                      
Co-Chair Donley suggested  holding the bill in Committee and working                                                            
with the court  system regarding adopting  a state policy  providing                                                            
that  citizens  are entitled  to  a  decision  within one  year  and                                                            
inclusion of each  judge's success on this in the  voter's guide. He                                                            
noted  judges would  have an  opportunity  to offer  a response  and                                                            
explanation  in  the voter  guide  individual  statements.  He  also                                                            
wanted to clarify the Department  of Administration no longer denies                                                            
the public  and the  judicial counsel  access  to this information,                                                             
which   he  stressed   is  part   of  the   judge's  constitutional                                                             
responsibility.  He also wanted to address Section  2, part 2 of the                                                            
bill and possibly remove it.                                                                                                    
Co-Chair Kelly ordered the bill HELD in Committee.                                                                              
     SENATE BILL NO. 92                                                                                                         
     "An Act relating to removal of members of the board of                                                                     
     trustees of the Alaska Permanent Fund Corporation; and                                                                     
     providing for an effective date."                                                                                          
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
ROBERT   STORER,   Executive   Director,   Alaska   Permanent   Fund                                                            
Corporation,  Department of Revenue,  outlined the two commissioner                                                             
and four members  of the public, make-up of the board.  He noted the                                                            
public  members  serve  staggered  four-year  terms. He  stated  the                                                            
legislation  provides  removal for  just cause  language  consistent                                                            
with 19 other State of  Alaska boards and commissions, including the                                                            
Pensions and  Investment Board, which  is charged with managing  the                                                            
assets of the state's retirement system.                                                                                        
Mr. Storer  told  the Committee  he has  been involved  in  managing                                                            
institution  funds for  over  20 years,  and has  seen how  managing                                                            
funds has  become increasingly  sophisticated,  thus requiring  time                                                            
for  board member's  to  "get up  to speed."  This  legislation,  he                                                            
stated,  would  ensure  continuity  in  fund  management  and  allow                                                            
institutional  memory   to be  passed  along   from  outgoing  board                                                            
Senator  Wilken recalled  that  the  legislature attempted  to  pass                                                            
similar legislation  approximately five years ago,  but the governor                                                            
vetoed  it. He asked  what was different  about  this bill that  the                                                            
governor would support.                                                                                                         
Mr. Storer affirmed  Governor Knowles vetoed the same  language in a                                                            
different bill, early in  his administration. Mr. Storer stated that                                                            
the governor  has  indicated he  now supports  this provision  after                                                            
speaking to former trustees and giving the matter consideration.                                                                
Senator  Ward requested  a copy of  governor's veto  message  on the                                                            
earlier bill.                                                                                                                   
Co-Chair Donley  asked if the governor has issued  a position on the                                                            
current legislation.                                                                                                            
Mr.   Storer   responded  that   before   introducing   this   bill,                                                            
representatives  of the  Corporation including  himself, spoke  with                                                            
the governor and were told he would support this legislation.                                                                   
Co-Chair Donley suggested  that since this language had been vetoed,                                                            
a written statement  from governor in support of this  bill, with an                                                            
explanation of why his position changed, is appropriate.                                                                        
Senator Green asked if "only for cause" is a legal term.                                                                        
RON  LORENSON,  outside  counsel   for the  Alaska   Permanent  Fund                                                            
Corporation, responded  that there is "a large body  of law" dealing                                                            
with the subject  of "for cause". He stated rather  than providing a                                                            
definition,  these laws review  a specific  situation and the  court                                                            
determines  whether  there  is just  cause.  He referenced  a  legal                                                            
opinion  he  prepared   on  the  subject  of  just   cause  for  the                                                            
Corporation, which he offered to share with the Committee.                                                                      
Senator Green requested a copy of the opinion.                                                                                  
Mr.  Lorenson  said  he  would  provide   this.  He  summarized  his                                                            
findings, saying,  "fair-minded people  would know it when  they see                                                            
it" when taking into consideration  performance and conduct. He said                                                            
the opinion also  states that traditionally the legislature  has not                                                            
given specific definitions of "for cause".                                                                                      
JOHN  KELSEY, former  trustee,  Alaska Permanent  Fund Corporation,                                                             
testified   via  teleconference  from   Anchorage  that   he  served                                                            
continuously on the Board  under three different governors from 1987                                                            
to 1995. He noted that  he served as chair three different times and                                                            
was in that position during  two occasions when all trustees, except                                                            
him, were replaced. He  stressed that during these times, he was the                                                            
only  trustee with  the  institutional  knowledge about  the  fund's                                                            
Mr.  Kelsey  urged  the Committee  to  pass  SB  192. He  cited  his                                                            
experiences as giving him  "great cause" in supporting this bill. He                                                            
emphasized  he did  not wish to  denigrate new  trustees,  attesting                                                            
they are  excellent appointees.  However, he  stressed the  need for                                                            
experienced trustees  on the Board to help guide newer  trustees. He                                                            
asserted  the  replacement  of numerous  trustees  at  one time  is,                                                            
"unfair  to  new  trustees  and  it  is  certainly   unfair  to  the                                                            
stakeholders  of the fund  who own the assets."  He asserted  that a                                                            
new  board is  understandably  cautious and  usually  fails to  make                                                            
timely  actions.  He  offered  to  detail  specific  occurrences  if                                                            
Mr. Kelsey  informed he  was twice forced  into the "uncomfortable"                                                             
situation  of training a  new board, which  he surmised was  not the                                                            
intent of the legislature that created the Corporation.                                                                         
Mr. Kelsey  remarked that passage  of this legislation would  ensure                                                            
"historical experience  will be provided for all future boards, thus                                                            
assuring that which was  intended by the enabling legislation, which                                                            
provided for staggered terms for trustees."                                                                                     
Co-Chair  Donley asked if  Mr. Kelsey knew  why the governor  vetoed                                                            
the earlier legislation.                                                                                                        
Mr. Kelsey replied that he had no way of telling.                                                                               
Co-Chair  Donley  reiterated   it  would  be  helpful  to  have  the                                                            
governor's  veto message related  to the  earlier legislation  and a                                                            
written statement regarding the current legislation.                                                                            
Senator  Ward   noted  Mr.  Storer   said  he  would  provide   this                                                            
Co-Chair Donley  suggested holding this bill until  this information                                                            
was received.                                                                                                                   
Senator Wilken  agreed this information was important  but suggested                                                            
moving the  bill at this time and  reviewing the information  before                                                            
the bill comes before the full Senate.                                                                                          
Co-Chair  Donley stated he  wanted to hold  the bill until  the next                                                            
Senator Wilken  noted he just received the governor's  veto message.                                                            
Co-Chair Donley ordered the bill HELD in Committee.                                                                             
Co-Chair Donley adjourned the meeting at 11:00 AM                                                                               

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