HB 188-PERSON W/DISABILITY SAVINGS ACCOUNTS  3:21:32 PM CHAIR OLSON announced that the first order of business would be HOUSE BILL NO. 188, "An Act relating to financial accounts for persons with disabilities; relating to financial institutions; relating to property exemptions; relating to securities; and providing for an effective date." 3:22:14 PM REPRESENTATIVE HUGHES moved to adopt the proposed committee substitute (CS) for HB 188, labeled 29-LS0787\E, Bannister, 3/9/16, as the working document. There being no objection, Version E was before the committee. 3:22:37 PM KIM SKIPPER, Staff to Representative Saddler, Alaska State Legislature, informed the committee the main change to HB 188 from the original version to Version E was that the Department of Revenue would run the program instead of the Department of Commerce, Community & Economic Development. Further changes are: broader language has been added related to changes in federal authorizing law; allows DOR to contract with other states to join a consortium and share administrative tasks; allows DOR to have an equal vote in the request for proposal (RFP) process; allows DOR to contract with its own financial institution under certain conditions. She paraphrased from the following sectional analysis [original punctuation provided]: Sec. 1: Cites this as the Alaska ABLE Act Savings Program Act Sec. 2: Creates a new chapter 65. Alaska Savings Program for Eligible Individuals Sec. 06.65.010: Program authorized. Authorizes Alaska ABLE savings program in the Department - which is the Alaska Department of Revenue. Allows it to implement and administer the program under the Federal ABLE Act. Sec. 06.65.020: General department duties. Outlines the duties of the department in implementing and administering the program. Sec. 06.65.030: Modification of program. Gives the Department authority to modify the program in accordance to any federal law changes Sec. 06.65.040: Additional department powers. Allows department to set fees for program transactions and services and also develop marketing plan to promote the ABLE program Sec. 06.65.050: Contracting authority; procurement exemption. Allows department to contract with a person to assist in implementing the program, provide services, join other states to obtain or provide services for implementation, join a cooperative effort with other states to provide services for the program that could include investment and record-keeping services. Allows state to join with other states to allow an Alaska resident to participate in a program in another state under federal authorizing law and for an outside state to participate in a program in this state. If contracting with another state, AS 36.30 (Procurement Code) will not apply. Sec. 06.65.060: Investment oversight: Allows the department to oversee and approve selection of investment managers and advisors for the program, and to oversee all investment disclosures and regulatory filings related to program investments Sec. 06.65.070: Financial contractor obligations: outlines duties/obligations of the selected financial contractor(s) Sec. 06.65.080: Additional audits: Allows the department to order an audit of the contractor's financial operation and position in addition to annual audit if the department has reason to be concerned Sec. 06.65.090: Contract termination; non-renewal. Gives department authority to not renew a financial contract. If so it would take custody of the program accounts and transfer them to another financial contractor that offers similar program accounts Sec. 06.65.100: Eligible individuals. Describes who is eligible to participate in the program. Sec. 06.65.110: Representative of eligible individuals. Describes who may act as a representative of the eligible individual who is a minor or lacks decision-making capacity Sec. 06.65.120: Program account ownership. States that the owner of the program account is the designated beneficiary. Sec. 06.65.130: Number of program accounts. Allows only one program account per designated beneficiary under federal authorizing law. Sec. 06.65.140: Program account application: Outlines department procedures for program account applications and information to be collected in that process Sec. 06.65.150: Program account establishment fee. Allows financial contractor to charge a nonrefundable to establish program account. That fee to be determined in the contract with the financial contractor. Sec. 06.65.160: Program account contributions. Outlines how a person can make a contribution, the limit authorized by federal law, allows department to reject or withdraw a contribution that exceeds that annual limit or maximum limit established by authorizing law or if designated beneficiary is not eligible, and that financial contractor must report contributions to the IRS. Sec. 06.65.170: Limited investment direction. Limits to two the number of times a program account investment can be changed. Sec. 06.65.180: Change of designated beneficiary. Allows a designated beneficiary or representative to change beneficiary of an account to another eligible individual in the family. Sec. 06.65.190: Distribution for qualified expenses. States that withdrawals from the program accounts may only be used for qualified expenses for the designated beneficiary. Sec. 06.65.200: Rollover distribution. Subject to federal law governing rollovers, a distribution from a program account can be made to the same designated beneficiary or another eligible individual in the family, and the timeframe for that to be done. Sec. 06.65.210: Statements. Requires that statements re: program accounts be issued 4 times a year at times established by the department and that the program contractor provide related information at the department's request. Sec. 06.65.220: Preparation and filing. In addition to other reports a financial contractor shall prepare and file statements required under state and federal law and other agencies. Sec. 06.65.230: Separate accounting. Requires a financial contractor to provide separate accounting for each program account. Sec. 06.65.240: Annual fee. Allows a financial contractor may charge an annual fee for maintenance of a program account. Sec. 06.65.250: Use as security. Prohibits a program account from being used as security for a loan Sec. 06.65.260: Exemption from creditor claims. States that a program account is exempt from a claim by a creditor Sec. 06.65.270: No state obligation. Declares that the program does not create an obligation of the state, department, or any agency to guarantee the return of principal or pay interest on the principal in a program account Sec. 06.65.280: Confidentiality. Specifies that program account information is confidential Sec. 06.65.290: Exchange of information. Allows the Department to exchange information with the Department of Health and Social Services and other state agencies to determine whether an individual is eligible Sec. 06.65.300: Treatment under means test programs. Specifies the program account amounts must be disregarded in determining eligibility for means- tested programs Sec. 06.65.310: Deposit from permanent fund dividend. Allows deposits to program accounts from the permanent fund dividend Sec. 06.65.320: Program expense fund. Establishes program expense fund and describes it purpose and operation Sec. 06.65.330: Medicaid claims: Allows that the state may file a claim against the program account of a beneficiary who dies. Sec. 06.65.340: Governing law. Establishes federal law as governing to the extent of any conflict with state law Sec. 06.65.350: Regulations. Requires the department to adopt implementing regulations Sec. 06.65.360: Annual report. Requires the department to evaluate the program each year and file an annual report on or before the start of each legislative session beginning in 2018 Sec. 06.65.390: Definitions. Sec. 3: AS 09.38.015(a): Creates an exemption for amounts in a program account Sec. 4: AS 36.30.850(b): Adds ABLE program account oversight as a responsibility of the Commissioner of Revenue Sec 5: AS 40.25.120(a) is amended to create an exception to public inspection for names, addresses, and other program account identifying information Sec. 6 AS 45.55.990(32): Excludes program accounts from the definition of "security" Sec. 7: AS 47.07.055: Allows the state to file a claim against the designated beneficiary's program account after the individual dies Sec. 8: Transition Requires the Department to file its first report on the program on or before the first day of the Second Regular Session of Thirtieth Alaska State Legislature (2018) Sec. 9: Transition Allows the Department to adopt regulations, but not before the effective date of the provisions authorizing the Alaska ABLE savings program Sec. 10: Effective Date Section 9 takes effect immediately 3:32:46 PM REPRESENTATIVE JOSEPHSON returned attention to proposed Section 06.65.180 [text previously provided], and questioned why accounts should be transferred from the designated beneficiary to another member of the family. MS. SKIPPER deferred to legal counsel for Autism Speaks. 3:33:42 PM STUART SPIELMAN, Senior Policy Advisor and Counsel, Autism Speaks, stated that this provision is consistent with federal law that provides for rollovers between affected [qualified] family members. It is not uncommon that individuals with disabilities have affected family members. REPRESENTATIVE JOSEPHSON returned attention to proposed Section 06.65.260 [text previously provided], and asked whether a disabled person can enter into a contract that is lawful, and if so, whether the contract is attachable in the case of a dispute. MR. SPIELMAN advised this is another provision in the federal law. An individual with a disability is presumed to be competent in most states; however, such as in bankruptcy law that protects one's housing, there are certain protections for assets. REPRESENTATIVE LEDOUX directed attention to proposed Section 06.65.260 [text previously provided], and pointed out that the account can hold up to $400,000, which is a significant exemption, and presuming that individuals with disabilities can enter into contracts, she expressed her concern. CHAIR OLSON opined that most accounts would be for lower amounts. REPRESENTATIVE LEDOUX agreed, but the exemption includes those who do have $400,000, and she suggested a cap at a lower level. 3:40:33 PM The committee took an at ease from 3:40 p.m. to 3:43 p.m. 3:43:12 PM MR. SPIELMAN, in response to Representative LeDoux, said he would respond in writing to the question as to whether states could reduce the cap. REPRESENTATIVE HUGHES directed attention to proposed Section 06.65.160 [text previously provided], and asked whether excess funds must be returned to the designated beneficiary. MS. SKIPPER said correct. REPRESENTATIVE HUGHES directed attention to proposed Section 06.65.310 [text previously provided], and asked for the purpose of including a provision that allows for the deposit of a permanent fund dividend. MS. SKIPPER stated the sponsor intended "to just like the college savings plan, to have a check-off box"; however, at this time beneficiaries would follow the procedure for a direct deposit. 3:45:40 PM CHAIR OLSON, after ascertaining no one else wished to testify, closed public testimony, [HB 188 was held over.]