Legislature(2019 - 2020)SENATE FINANCE 532
02/10/2020 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB139 | |
| HB68 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 139 | TELECONFERENCED | |
| *+ | HB 68 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
February 10, 2020
9:01 a.m.
9:01:03 AM
CALL TO ORDER
Co-Chair von Imhof called the Senate Finance Committee
meeting to order at 9:01 a.m.
MEMBERS PRESENT
Senator Natasha von Imhof, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Click Bishop
Senator Lyman Hoffman
Senator Donny Olson
Senator Bill Wielechowski
MEMBERS ABSENT
Senator David Wilson
ALSO PRESENT
Representative Jennifer Johnston, Sponsor; Angela Rodell,
Executive Director, Alaska Permanent Fund Corporation; Grey
Mitchell, Director, Division of Workers' Compensation
Division; Senator Cathy Giessel.
SUMMARY
CSHB 68(FIN)
LABOR STDRS/SAFETY; WORKER COMPENSATION
CSHB 68(FIN) was HEARD and HELD in committee for
further consideration.
HB 139 AK PERM. FUND CORP. PROCUREMENT EXEMPTION
HB 139 was HEARD and HELD in committee for
further consideration.
HOUSE BILL NO. 139
"An Act providing an exemption from the state
procurement code for the acquisition of investment-
related services for assets managed by the Board of
Trustees of the Alaska Permanent Fund Corporation."
9:02:27 AM
REPRESENTATIVE JENNIFER JOHNSTON, SPONSOR, discussed the
legislation. She stated that the gill granted an exemption
from the state procurement code for the Alaska Permanent
Fund Corporation. She stated that current laws exempted the
corporation from procurement code when it required income-
producing assets or delegated investment authority, however
they must comply with the state's procurement code in
evaluating and managing the asset in which they possess.
Currently, when the corporation evaluated those types of
investments, they needed to hire third-party experts and
also go through the procurement code to secure the experts.
She stated that if the organization did not have time to
adhere to the code, but feel the fund was worthy, they
would hire a fund manager expert.
Senator Olson wondered why the idea had not been presented
in the past.
Representative Johnston replied that Ms. Rodell could
further address the question.
Co-Chair von Imhof stated that Ms. Rodell would be
available for testimony and questions. She wondered whether
the Permanent Fund Corporation was in support of the bill.
9:05:20 AM
ANGELA RODELL, EXECUTIVE DIRECTOR, ALASKA PERMANENT FUND
CORPORATION, stated that procurement code exemption had
been pursued by the corporation for a long time. She spoke
in support of the bill.
Senator Wielechowski noted the 1993 attorney general
opinion on this issue, which refused to exempt the
corporation from the procurement requirement. He queried
the current urgency. He stressed that the purpose of the
procurement laws was to prevent contracts to friends,
political allies, supporters, paybacks, and hasty contract
decisions that could lead to negligent hiring of
contractors.
Ms. Rodell stressed that much had changed since the asset
allocation of the fund in 1993. The ability to be a prudent
investor was on the books since 2005. She stressed that
there was a responsibility to deliver an amount that was
substantial for the purpose of state government. She noted
that the success depended upon the trust of Alaskans.
Senator Wielechowski felt that maintaining the trust of
Alaskans was the purpose of the procurement code. He
wondered whether there was a way to clear experts of
certain areas need under the current code.
Ms. Rodell replied that ideas may come up, so having a long
list of possible contacts was not feasible, because the
experts were not known in advance.
Senator Wielechowski queried the anticipated costs with the
contracts, and how those contracts would be paid.
Ms. Rodell replied that the money would come from the
operating budget, which was from the Earnings Reserve
Account.
9:10:39 AM
Co-Chair von Imhof pointed out that much had changed since
1993. She stressed that the investment market had
exponentially grown. She remarked that it was important to
respond quickly and give the corporation the flexibility in
the responsibility to provide 60 to 70 percent of the
state's revenue. She remarked that there was a precedent in
other corporations that had flexibility in the procurement.
She remarked that there was a need to invest in many
different vehicles in order to be diversified and
thoughtful.
Senator Olson remarked that changes to the already
successful structure in the corporation made people
uncomfortable. He wondered how the trust would be
maintained by the people of Alaska.
Ms. Rodell replied that the bill did not address the Alaska
Retirement Management Board (ARMB), and noted that ARMB had
more procurement flexibility than the Alaska Permanent Fund
Corporation had under the legislation. She hoped that the
transparency of the corporation allowed for the recognition
of the trust of Alaskans.
9:15:54 AM
Co-Chair von Imhof stressed that the Permanent Fund Board
meetings were open to the public, and the financials were
also available to the public.
Senator Wielechowski noted the existing exemption in the
procurement code for the Board of Trustees. He wondered
what types of contracts would be addressed in the current
bill that the current exemption did not already cover.
Ms. Rodell replied that those contracts that exist under
the current exemption had a fiduciary responsibility. The
contracts in the bill required expertise.
Senator Bishop wondered whether there was anticipation of
contracting with existing contractors in the organization.
Ms. Rodell responded that it could be both.
Co-Chair von Imhof wondered whether the Alaska Housing
Finance Corporation (AHFC) had a similar exemption.
Ms. Rodell replied in the affirmative.
Senator Wielechowski queried the process of issuing the
contracts.
Ms. Rodell replied that the contract would be decided
internally by the staff, and she or the CEO would sign off
on it.
9:20:10 AM
Co-Chair von Imhof wondered whether there would be any
ability for the public to see the results of the decisions.
Ms. Rodell replied that it was mostly protected under non-
disclosure agreements, because when one evaluates the
investment there should not be a signal of interest too
early.
Senator Wielechowski surmised that the public would not be
aware of the hired experts.
Ms. Rodell agreed to provide the information.
Senator Olson wondered whether there was consideration
about adding a sunset date to the bill.
Representative Johnston replied that she did not see a need
for the sunset date in the bill. She felt that it was
needed to catch up to the sophistication of the fund.
Senator Olson felt that there was almost pessimistic about
the return of investment in the current structure.
Representative Johnston restated that she did not see a
need to keep it the same structure.
9:25:33 AM
Senator Olson remarked that the success had to do with the
stock market, so he felt that there would be a correction.
Co-Chair von Imhof stressed that there should not be
speculation about the stock market activity.
Senator Bishop wondered how much money would be affected by
the legislation.
Ms. Rodell replied that it would be under $1 million
throughout a fiscal year.
Senator Bishop wondered how much was in the investment
fund.
Ms. Rodell replied that the fund was currently estimated at
approximately $67.8 billion.
Senator Bishop stated that he had a question for
Legislative Legal. He remarked that the Legislative Budget
and Audit Committee had the ability to deeply examine the
investments.
Co-Chair von Imhof felt that it was of the highest use to
meet the prudent investor rule to examine the underlying
investments in any particular investment vehicle.
Senator Wielechowski saw the benefits of the legislation,
but remarked that there were no spending caps in the bill.
Ms. Rodell stressed that the corporation was limited every
year by its budget.
9:30:07 AM
Senator Wielechowski queried support of adding a spending
cap to the bill.
Ms. Rodell replied that that she did not believe a cap was
necessary, because by definition there would be a cap in
the budget process. She stated that she did not support a
cap.
Senator Wielechowski wondered whether there was support for
a provision that said that the corporation must provide the
information to the legislature.
Ms. Rodell suggested that if the amendment went through the
process, she would support it.
Senator Wielechowski stressed that he did not want to
provide more power, rather he wanted to restrict power.
Co-Chair von Imhof OPENED and CLOSED public testimony.
Co-Chair Stedman felt that there could be an update on the
powers of Legislative Budget and Audit.
HB 139 was HEARD and HELD in committee for further
consideration.
CS FOR HOUSE BILL NO. 68(FIN)
"An Act relating to the division of labor standards
and safety; relating to the division of workers'
compensation; establishing the division of workers'
safety and compensation; relating to employment of a
minor; and providing for an effective date."
9:34:51 AM
GREY MITCHELL, DIRECTOR, DIVISION OF WORKERS' COMPENSATION
DIVISION, stated that the bill proposed the merging of the
Division of Worker's Compensation with the Division of
Labor Standards and Safety. He remarked that the Division
of Labor Standards and Safety was primarily focused on
preventing workplace accidents and enforcing laws related
to workplace safety and wages. He explained that the
Division of Workplace Compensation was focused on the
division administration of benefits. The missions of the
two missions complemented the other. The divisions
historically worked together, and the bill would further
the ability to capitalize on efficiencies.
9:45:27 AM
Co-Chair von Imhof noted the two parts of the bill. She
wondered why a bill was necessary to combine the two
departments when it was already being done successfully.
Mr. Mitchell stated that the majority of the changes would
adjust the director name of the new combined division.
Co-Chair Stedman queried an impact on the fishing industry
with the changes of the child labor issue. He also wondered
what industries were relying on the younger people to work.
Mr. Mitchell responded that the changes would not affect
the fishing industry. He stated that 14- and 15-year-olds
were currently prohibited from working on a fishing vessel
unless that fishing vessel was owned by their parent. He
stated that the main industry that employed 14- and 15-
year-olds was the retail sector.
Co-Chair Stedman queried more clarity on the strictness of
the requirement for young people to only be employed on
their parents' vessels.
Mr. Mitchell replied that it was very strict. The parents
must own and operate the business.
Senator Olson wondered whether grandparents were included
in that provision.
Mr. Mitchell responded that grandparents were currently not
included, but under the proposed adjustment the
grandparents would be included in the exemption.
9:50:07 AM
Senator Olson surmised that a grandparent who hired their
grandchild who was under the age of 16, would be violating
current law.
Mr. Mitchell replied in the affirmative.
Co-Chair von Imhof stressed that the bill addressed that
issue.
Senator Wielechowski wondered how much ownership a parent
or grandparent would need to have in order to be considered
the business owner.
Mr. Mitchell replied that it was 51 percent or more.
Senator Wielechowski queried the definition of "operating."
Mr. Mitchell replied that the parent would be on the vessel
controlling the operations of the vessel.
Senator Wielechowski wondered whether the bill would exempt
grandparent owned business for the protections of young
people against employment in dangerous industries.
Mr. Mitchell responded that the current exemption for
parents applied to all child labor provisions. The proposed
exemptions would exempt 14- and 15-year-olds from all of
the requirements under the child labor provisions of the
business owned and operated by the grandparent.
Senator Wielechowski wondered whether a child work in adult
entertainment business that was owned by their parent or
grandparent.
Mr. Mitchell agreed to provide that information.
Senator Wielechowski looked at the workers compensation
provision and noted that it added to the powers of the
director of the division. He wondered whether it had legal
meaning, or whether it codified the current goals.
Mr. Mitchell replied that the provision was currently under
the authorities for the Division of Worker's Compensation.
He stated that it would combine the first five items of the
powers of duties of the other division.
Senator Bishop wondered whether there would be a sectional
analysis.
Co-Chair von Imhof replied that the fiscal notes would be
discussed, and there could be a sectional analysis. She
encouraged the asking of the question.
9:55:13 AM
Senator Bishop queried the occupations of the bulk of the
permits.
Mr. Mitchell responded that there were 8,700 work permit
applications in FY 19. He stated that approximately 8,200
were approved permits. He remarked that they were all in a
variety of industries.
Senator Bishop surmised that there was no change in the 23
hours a week limit.
Mr. Mitchell replied that there were two standards for
hourly limitations for 14- and 15-year-olds: when school is
in session has a 23 hour per week limit; and a limitation
that was 40 hours per week in the summer months. He stated
that the standard would still apply in the current bill.
Senator Bishop noted the start time for in school workers
had been changed to 7am.
Mr. Mitchell agreed.
Senator Bishop remarked that it was currently 5am.
Mr. Mitchell agreed.
Co-Chair von Imhof surmised that there was not a huge
change to the base labor rules for young people, but the
hours were slightly different and adding grandparents. She
remarked that the other part merged the two departments.
Mr. Mitchell agreed.
Co-Chair von Imhof felt that examination of existing laws
should be done outside of the meeting.
Senator Wielechowski wondered whether there was a
limitation of hours for a child working for their parent or
grandparent.
Mr. Mitchell replied that exemption applied to all Alaska
law, but did not apply to federal law. There was a similar
exclusion under federal law, but it did not apply to the
hazardous occupations of a business owned and operated by a
parent.
Co-Chair von Imhof wanted to address the fiscal note.
Mr. Mitchell discussed the fiscal note.
Co-Chair von Imhof commended the administration to examine
efficiencies and cost savings.
10:04:53 AM
Senator Bishop supported the sunset because he understood
the workload.
Senator Wielechowski remarked that he had a current bill
that would repeal the Workers Compensation Appeals
Committee that would save additional money. He queried
support of an amendment to include that idea in the bill.
Mr. Mitchell replied that he would consult with department
leadership.
Co-Chair Stedman expressed concern about whether the
legislation should be expanded to include more extended
family.
Senator Olson echoed Co-Chair Stedman's concern.
Co-Chair von Imhof discussed the following day's agenda.
CSHB 68(FIN) was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
10:09:13 AM
The meeting was adjourned at 10:09 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB139 APFC Statement.pdf |
SFIN 2/10/2020 9:00:00 AM |
HB 139 |
| HB 139 APFC Response 5.11.19.pdf |
SFIN 2/10/2020 9:00:00 AM |
HB 139 |
| HB139 Testimony - Received by 4.25.19.pdf |
SFIN 2/10/2020 9:00:00 AM |
HB 139 |
| HB 139 Sponsor Statement 2.5.2020.pdf |
SFIN 2/10/2020 9:00:00 AM |
HB 139 |
| HB 68 Explanation of Changes v. A to U.pdf |
SFIN 2/10/2020 9:00:00 AM |
HB 68 |
| HB 68 Sectional Analysis v. U 5.7.2019.pdf |
SFIN 2/10/2020 9:00:00 AM |
HB 68 |
| HB 68 Transmittal Letter 2.19.2019.pdf |
SFIN 2/10/2020 9:00:00 AM |
HB 68 |
| HB 68 DOLWD Response 2.11.2020.pdf |
SFIN 2/10/2020 9:00:00 AM |
HB 68 |
| HB 139 APFC Response SFIN 2.13.2020.pdf |
SFIN 2/10/2020 9:00:00 AM |
HB 139 |