Legislature(1993 - 1994)
04/18/1994 09:12 AM Senate STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE STATE AFFAIRS COMMITTEE
April 18, 1994
9:12 a.m.
MEMBERS PRESENT
Senator Loren Leman, Chair
Senator Robin Taylor
Senator Jim Duncan
MEMBERS ABSENT
Senator Mike Miller, Vice Chair
Senator Johnny Ellis
COMMITTEE CALENDAR
SENATE BILL NO. 378
"An Act relating to permanent fund dividend program notice
requirements and to dividends of individuals convicted of felonies
or misdemeanors; and providing for an effective date."
HOUSE JOINT RESOLUTION NO. 60
Relating to an amendment to the Constitution of the United States
prohibiting federal courts from ordering a state or a political
subdivision of a state to increase or impose taxes.
CS FOR HOUSE BILL NO. 494(STA) am
"An Act changing the Alaska State Pension Investment Board to the
Alaska Pension Investment Authority and relating to the authority;
and providing for an effective date."
PREVIOUS SENATE COMMITTEE ACTION
SB 378 - No previous senate committee action.
HJR 60 - No previous senate committee action.
HB 494 - No previous senate committee action.
WITNESS REGISTER
David Skidmore, Aide
Senate Finance Committee
State Capitol, Juneau, AK 99801-1182¶465-3709
POSITION STATEMENT: sponsor of SB 378
Tom Williams, Director
Permanent Fund Dividend Division
Department of Revenue
P.O. Box 110460, Juneau, AK 99811-0460¶465-2323
POSITION STATEMENT: testified on SB 378
Joseph Easaw, Jr., Aide
House State Affairs Committee
State Capitol, Juneau, AK 99801-1182¶465-3719
POSITION STATEMENT: sponsor of HJR 60
Dave Harding, Aide
Representative MacLean
State Capitol, Juneau, AK 99801-1182¶465-4833
POSITION STATEMENT: prime sponsor of HB 494
Bill Corbus, Chairperson
Alaska State Pension Investment Board
612 W. Willoughby Ave., Juneau, AK 99801¶586-2222
POSITION STATEMENT: in favor of HB 494
Gail A. Oba, Vice-Chairperson
Alaska State Pension Investment Board
10615 Main Tree, Anchorage, AK ¶276-1550
POSITION STATEMENT: in favor of HB 494
Darrel J. Rexwinkel, Commissioner
Department of Revenue
P.O. Box 110400, Juneau, AK 99811-0400¶465-2300
POSITION STATEMENT: testified on HB 494
Bob Stalnaker, Director
Division of Retirement & Benefits
Department of Administration
P.O. Box 110203, Juneau, AK 99811-0203¶465-4470
POSITION STATEMENT: testified on HB 494
Claudia Douglas, President
NEA Alaska
114 2nd St., Juneau, AK 99801¶586-3090
POSITION STATEMENT: in favor of HB 494
ACTION NARRATIVE
TAPE 94-28, SIDE A
Number 001
CHAIRMAN LEMAN calls the Senate State Affairs Committee to order at
9:12 a.m.
Number 005
CHAIRMAN LEMAN brings up SB 378 (NO PFD:PERSONS JAILED FOR FELONY
OR MISD.) as the first order of business before the Senate State
Affairs Committee and calls Mr. Skidmore to testify.
Number 013
DAVID SKIDMORE, Aide to the sponsor of SB 378, states SB 378 was
drafted to create some compensatory provisions for the State of
Alaska's criminal justice system for costs caused by misdemeanants.
Mr. Skidmore describes the bill as outlined in the sponsor
statement.
Number 049
MR. SKIDMORE announces that Senator Frank proposes an amendment to
SB 378, which would insert a new section on page 1, line 5. The
amendment reads as follows,
"*Section 1. PURPOSES. The purposes of the amendments to AS
43.23.005(d) and AS 43.23.028(b) in this Act are to obtain
(1) additional funding for the State agencies specified;
and
(2) full or partial reimbursement from individuals
convicted of a felony or misdemeanor for the costs imposed on
the State criminal justice system that are related to
conviction and incarceration."
Renumber following bill sections accordingly.
Number 060
SENATOR TAYLOR moves the adoption of amendment #1 (Senator Frank's
amendment)
CHAIRMAN LEMAN asks if there are any objections to amendment #1.
SENATOR TAYLOR says it is important to establish that SB 378 is a
cost-recovery factor, and that the state incurs significant costs
in incarcerating people. Senator Taylor stresses that SB 378 is in
no way intended as a punitive, or additional punitive matter.
Number 079
CHAIRMAN LEMAN asks if there are any further comments on amendment
The chairman asks if there is any objection to the adoption of
amendment #1. Hearing none, the chairman states amendment #1 has
been adopted.
Number 083
MR. SKIDMORE states he has discussed a conceptual amendment with
the staff of the Senate State Affairs Committee, which would exempt
from this legislation, individuals convicted of misdemeanors for
which statute provides a mail-in bail schedule, and misdemeanors
which do not require a mandatory court appearance.
CHAIRMAN LEMAN moves the adoption of amendment #2 (the conceptual
amendment just described).
Number 099
SENATOR TAYLOR objects for purposes of discussion. Senator Taylor
states he had assumed SB 378 would apply mainly to the costs of
incarceration.
CHAIRMAN LEMAN states amendment #1 refers to those persons who have
been incarcerated.
SENATOR DUNCAN observes that lines 9 and 10 probably override that.
MR. SKIDMORE informs the committee that section 1 of SB 378 is not
restricted to individuals who are incarcerated. It also applies to
individuals who were solely convicted of a misdemeanor or felony.
Number 119
SENATOR TAYLOR comments he thinks that in the conceptual amendment,
the list of exceptions will be rather long.
Number 124
CHAIRMAN LEMAN states there is a motion before the committee.
SENATOR TAYLOR says unless a person has been incarcerated or has
cost the system a significant amount of money, SB 378 probably
should not be applicable.
Number 129
MR. SKIDMORE states that during the drafting of SB 378, agencies of
the criminal justice system were contacted for average costs
misdemeanants impose on the system. Estimates from those agencies
are included in members' bill files. Mr. Skidmore repeats the
estimates that were made by agencies of the criminal justice
system, and states that persons who are convicted, but do not serve
time, still have a fiscal impact on the criminal justice system.
Number 153
CHAIRMAN LEMAN asks if there is any further discussion involving
amendment #2.
Number 156
SENATOR TAYLOR asks if the language in 43.23.055 is the language
which enables the state to file for and collect the dividend of a
criminal.
MR. SKIDMORE responds in section 2, the statutory site is
43.23.028(b). That statute currently provides that the money that
would have been paid to these individuals in a given fiscal year,
will be available to the state in the next fiscal year for
appropriation.
Number 175
CHAIRMAN LEMAN states the conceptual amendment, when drafted, will
exclude those misdemeanors that do not require a mandatory court
appearance. The chairman states the committee does not want to
inadvertently increase the number of court appearances. If a
person is charged with an offense with a fine of $75, and the
person will lose their permanent fund dividend by not contesting
the charges, that person is going to request a court appearance.
SENATOR DUNCAN asks if it might include misdemeanors where the
person is not incarcerated.
CHAIRMAN LEMAN requires that it could.
Number 191
SENATOR TAYLOR is concerned that a department, as it attempts to
recover costs, would recover more money from a persons PFD than it
would from a fine.
Number 200
CHAIRMAN LEMAN says he presumes that will be the case in many
instances. The chairman asks if there is any objection to
amendment #2. Hearing none, the chairman states amendment #2 has
been adopted. The chairman calls Mr. Williams to testify.
Number 205
TOM WILLIAMS, Director, Permanent Fund Dividend Division,
Department of Revenue, states the fiscal note from the department
shows zero impact, which assumes the Department of Corrections or
the Court System would continue to notify the Department of Revenue
of the individuals who meet the criteria outlined in SB 378. Mr.
Williams adds that the only other impact SB 378 would have, would
be to reduce other attachments on these individuals dividends, such
as attachments from the Child Support Enforcement Division and the
Public Defender Agency. Mr. Williams continues to discuss the
fiscal note from the Department of Revenue.
Number 232
SENATOR DUNCAN asks for a clarification on whether a person would
lose their whole dividend, and not simply an amount that would
cover the cost involved.
Number 240
MR. WILLIAMS responds a person would simply lose their whole
dividend. Under current law, the state can only withhold dividends
from persons incarcerated as a result of a felony conviction. SB
378 would cover persons convicted of a felony, convicted of a
misdemeanor, or incarcerated for conviction of a felony or
misdemeanor.
SENATOR DUNCAN states a person could still lose their dividend in
a case where they are not incarcerated, but have a mandatory court
appearance for a minor traffic infraction. Senator Duncan comments
he has some concerns about the bill; paying costs out of one's
dividend is one thing, but losing the whole dividend...
CHAIRMAN LEMAN asks Mr. Williams if the bill can be crafted to take
a portion, instead of the whole dividend. The chairman is also
concerned about taking monies away from child support.
Number 263
MR. WILLIAMS responds he would defer to the sponsor on those
questions.
Number 264
CHAIRMAN LEMAN asks if there is any more discussion on SB 378.
Number 268
SENATOR TAYLOR states he thinks the idea of recovering costs is a
good one, but the questions that have been raised today give him
concern about the legislation.
Number 294
CHAIRMAN LEMAN states he shares some of those concerns also. The
chairman announces the committee will hold SB 378 to continue to
work on it.
Number 300
CHAIRMAN LEMAN brings up HJR 60 (AMEND US CONSTIT. TO LIMIT FED.
COURTS) as the next order of business before the State Affairs
Committee and calls Mr. Easaw to testify.
Number 315
JOSEPH EASAW, Aide to the House State Affairs Committee, sponsor of
HJR 60, states the intent of the resolution is very
straightforward. Mr. Easaw gives the committee background
information on why HJR 60 was introduced.
Number 345
CHAIRMAN LEMAN asks Mr. Easaw if he can submit the backup material
to which he is referring to the Senate State Affairs Committee.
MR. EASAW responds he will do so.
CHAIRMAN LEMAN asks if there is any committee discussion on HJR 60.
Number 348
SENATOR TAYLOR makes a motion to discharge HJR 60 from the Senate
State Affairs Committee with individual recommendations.
Number 350
CHAIRMAN LEMAN asks if there is anyone in the audience who wishes
to testify on the resolution. Hearing none, he asks if there is
objection to the motion to discharge. Hearing no objection, the
chairman orders HJR 60 released from committee with individual
recommendations.
Number 355
CHAIRMAN LEMAN brings up HB 494 (ALASKA PENSION INVESTMENT
AUTHORITY) as the next order of business before the Senate State
Affairs Committee and calls Mr. Harding to testify.
Number 362
DAVID HARDING, Aide to Representative MacLean, prime sponsor of HB
494, states the bill would offer several opportunities that would
lead to greater long-term financial stability and more appropriate
lines of authority in the state's pension investment system. Mr.
Harding further describes the bill as outlined in the sponsor
statement.
Number 385
CHAIRMAN LEMAN asks Mr. Harding if HB 494 is similar to a previous
bill.
Number 388
MR. HARDING responds it has been around before, but he does not
remember how far through the legislative process the bill got. He
states there are differences between HB 494 and the previous
legislation relating to this subject.
CHAIRMAN LEMAN calls Mr. Corbus to testify.
Number 394
BILL CORBUS, Chairperson, Alaska State Pension Investment Board,
introduces Ms. Oba and other witnesses in the audience. Mr. Corbus
reads a written statement. There are several items in committee
members' bill file on HB 494 from the Alaska State Pension
Investment Board and the Department of Revenue.
Number 437
GAIL A. OBA, Vice-chairperson, Alaska State Pension Investment
Board, states HB 494 was modeled after previous legislation
introduced by Senator Pourchot. Ms. Oba gives a brief history of
the previous legislation and of HB 494.
MS. OBA tells the committee of a survey conducted by the Department
of Revenue, the intent of the survey being to gather information
about boards, staff, and accountability of state pension funds.
Number 461
CHAIRMAN LEMAN asks if there are any questions for Ms. Oba or Mr.
Corbus. Hearing none, the chairman calls a brief at ease of the
Senate State Affairs Committee.
Number 462
CHAIRMAN LEMAN calls the committee back to order.
Number 464
SENATOR TAYLOR makes a motion to adopt the committee substitute for
HB 494.
Number 467
SENATOR DUNCAN objects and asks Mr. Corbus if he has seen the
proposed committee substitute.
MR. CORBUS responds he has not.
Number 470
SENATOR DUNCAN states the only change, from what he understands, is
that on page 4, section 7, employees of the authority would be in
the exempt service.
MR. CORBUS thinks the board would prefer the committee substitute.
Number 480
MS. OBA points out that no other authority has language restrictive
like the language here. This is unique to the state pension
authority.
SENATOR DUNCAN asks if subsection (b) was also in the house bill.
MR. CORBUS responds that language was put in the house bill at the
very last minute, and was not part of the authority's original
proposal.
Number 488
SENATOR DUNCAN states he has no problem with that. He is focusing
on the last sentence of the new language.
Number 490
CHAIRMAN LEMAN clarifies for Senator Duncan that the only change in
this amendment was the deletion of that second part. The other
part was language that came from the house.
MS. OBA responds she did not understand the question, and that was
original language from the authority.
Number 507
CHAIRMAN LEMAN asks if there is further objection to the adoption
of the Senate State Affairs committee substitute for HB 494.
Hearing none, the chairman announces the cs has been adopted.
CHAIRMAN LEMAN asks who in the audience is planning to testify on
HB 494.
Number 521
COMMISSIONER REXWINKEL states Mr. Prussing and Mr. Storr are
available to answer questions on the fiscal note.
SENATOR DUNCAN asks if the department can explain the two different
fiscal notes on HB 494.
DARREL REXWINKEL, Commissioner, Department of Revenue, states the
Treasury Division now has twenty-nine employees. Those employees
work on various funds; the department has at least eighteen funds.
Four of those funds are the pension trust funds. The fiscal note
for the pension investment board consists of twenty positions. The
pension note for the remaining management functions consists of
about seventeen employees. The important component is in the
salaries. Commissioner Rexwinkel continues to explain the fiscal
notes for HB 494.
Number 555
COMMISSIONER REXWINKEL states it is important to note that there is
a continuing cost of 497,000$ for the pension authority operations.
Those monies all come out of the pension trust fund. There is over
7 billion dollars in the pension trust fund. One basis point,
which is 1/100th of a percent of 7 billion dollars would be
700,000$. So if the fund were to only earn 1 basis point, it would
more than cover the cost of operations.
COMMISSIONER REXWINKEL states that the board had approved and
expenditure of 398,000$, but the House Finance Committee cut that
to 200,000$, just because. There was no calculation of the number.
The board believes 398,000$ is the appropriate figure, and would
enable the investment authority to be a functional entity.
Number 575
COMMISSIONER REXWINKEL states the fiscal note for the Treasury
Division reflects that costs will be continuing costs, and not
first year costs. The commissioner states that, though the fiscal
note reflects an increased cost, there will also be an estimated
increase in revenue from 10 million dollars to 30 million dollars.
TAPE 94-28, SIDE B
Number 595
SENATOR TAYLOR asks why the state should limit employees from
further investment in their retirement system.
Number 575
COMMISSIONER REXWINKEL responds that monies the department is
managing now are definite state programs established by the State
of Alaska. To start accepting other monies would put the state in
direct competition with private business enterprises. In addition,
if the state did accept other monies, and did not return at an
expected rate, then the department would receive a lot of critique
that could significantly interfere with the ability to provide
proper management of the fund.
Number 565
SENATOR TAYLOR asks if the funds can be managed to defer employee
compensation.
Number 560
COMMISSIONER REXWINKEL explains the relationship between the
pension investment board and the Department of Administration. In
terms of accepting additional funds, the board would have to start
registering with the FCC, and would have to do a lot of additional
administrative work, which the board does not think would be in the
best interest of the state.
Number 550
SENATOR TAYLOR asks if, under deferred compensation, that money
will still be managed through the pension investment board, and
will return the same amount of money.
Number 548
COMMISSIONER REXWINKEL responds that would not be the case. The
board has been working on the deferred compensation option, and
there are at least eight investment options opening up, into which
an individual could elect to put their money.
SENATOR TAYLOR asks what the return has been on the deferred
compensation investments.
Number 530
BOB STALNAKER, Director, Division of Retirement & Benefits,
Department of Administration, states the Department of
Administration administers the state pension plans, including
deferred comp. Mr. Stalnaker thinks federal government fiscal
policy has more to do with the bottom line. The plans that the
state manages are qualified through the Internal Revenue Service.
The IRS does not want people to defer all their income, and so puts
limitations on the amount an employee is allowed to defer. In the
deferred comp plan, the limitation is 7,500$ per year. In the SBS
plans, as combined with PERS, is a maximum cap of 25% of their
income as tax deferred contributions. Mr. Stalnaker states the
blended rate of return was about 7%. The stocks and the bonds
return varying rates.
Number 502
SENATOR TAYLOR thanks Mr. Stalnaker for his explanation.
Number 496
MR. STALNAKER says there is no question that the deferred
compensation program is under-utilized.
Number 493
COMMISSIONER REXWINKEL adds that there are no back-in fees in the
state deferred compensation program.
Number 484
MR. STALNAKER points out that, even if an employee severs their
employment relationship with the state, that person can elect to
leave their money in the deferred comp system.
Number 477
SENATOR TAYLOR asks where the state is on the unfunded liability of
the various investment programs.
Number 471
MR. STALNAKER responds that PERS and TERS were recently reviewed,
and the funding status of TERS is at 93.5%, while PERS is at 95+%.
These figures include prefunding health insurance. Alaska is one
of the only states in the country that prefunds health insurance as
part of pension costs. If the state did not prefund health
insurance, the state's funding ratios would be in excess of about
120% in both systems. So the funding status of the systems are
very good.
Number 455
SENATOR TAYLOR asks how that compares with other funds across the
country.
Number 451
MR. STALNAKER responds that PERS and TERS are in about the top 10%
of funded status of most systems. Without the health insurance
prefunding, the state would probably be up in the top 1-2%. The
state's philosophy is that a system should not reach 100% funded.
It should strive for just below 100% funded. It would put undue
burden on employers by over-funding a system.
Number 440
SENATOR DUNCAN asks if the fiscal notes would allow flexibility to
the board for needed staffing requirements.
Number 435
COMMISSIONER REXWINKEL replies that question goes back to the whole
allocation function. The board believes that twenty positions
would be the minimally accepted staffing level.
SENATOR DUNCAN asks why the fiscal note only allows the appointment
of a director.
COMMISSIONER REXWINKEL responds that the fiscal note Senator Duncan
is looking at only shows the increase resulting from HB 494.
SENATOR DUNCAN asks if the state pension board agrees with the
figures in the fiscal notes.
COMMISSIONER REXWINKEL replies that the fiscal notes were approved
of by the pension board. The commissioner repeats that the one
change made by the House Finance Committee reducing one fiscal note
from 398,000$ to 200,000$ was an arbitrary reduction. There is a
continuing discussion of the Department of Revenue fiscal notes.
Number 396
COMMISSIONER REXWINKEL states that monies will be shifted from
other programs within the Department of Revenue to cover the cost
of the state pension board if that board is not fully funded.
Number 390
CHAIRMAN LEMAN thanks the commissioner for his testimony and calls
the next witness. The chairman announces HB 494 will be held over
until Wednesday's committee meeting, at which time he intends to
move the bill.
CLAUDIA DOUGLAS, President, NEA-Alaska, states that the NEA
supports HB 494, and reads a brief, written statement.
Number 373
CHAIRMAN LEMAN thanks Ms. Douglas for her testimony and restates
that HB 494 will be held until Wednesday.
CHAIRMAN LEMAN adjourns the Senate State Affairs Committee meeting
at 10:22 a.m.
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