HB 201-PERM. FUND DIVIDEND APPS OF MILITARY 8:07:28 AM CHAIR SEATON announced that the first order of business was HOUSE BILL NO. 201, "An Act relating to an application for a permanent fund dividend for a member of the armed forces of the United States serving on active duty outside of the state; and providing for an effective date." 8:07:29 AM SHARALYN WRIGHT, Staff to Representative Mike Chenault, Alaska State Legislature, introduced HB 201 on behalf of Representative Chenault, sponsor. She explained that the purpose of the bill is to permit a person who has a power of attorney for an active military duty person who's stationed outside of the State of Alaska to sign and file an Alaska Permanent Fund Dividend (PFD) application for the said individual. She presented an example of an Alaskan man stationed in Japan who was then deployed to Afghanistan, and the PFD Division could not contact him; he didn't know that there was a problem with his PFD application until he returned to Alaska. MS. WRIGHT continued: So if someone back home had a power of attorney, that power of attorney allows you to make absolutely life- changing decisions: you can sign for a bank account, you can sign for real estate, you can make all kinds of decisions. And in the whole scope of things, the [PFD] shouldn't fit at the top or the bottom of that list; it should fit somewhere in the middle. And we should allow someone ... who's a trusted person in the military person's life, ... to sign that [PFD] application so that [the PFD check] comes in a timely manner. 8:09:35 AM REPRESENTATIVE GARDNER remarked that there is the potential for problems if one or more persons applies on behalf of the person who's on active duty. She asked what would happen if the service person never got the money because someone else signed for the PFD check and took it. MS. WRIGHT replied, "I would not imagine a responsible individual having more than one power of attorney, ... because when you have a power of attorney and you decide to change that, you also are required to revoke any previous powers of attorney." 8:11:06 AM CHAIR SEATON commented that the bill would only allow the individual with the power of attorney to apply for the PFD. He asked who would be held responsible for fraud if a person applied for a PFD on behalf of another person who is not eligible to receive the PFD. MS. WRIGHT responded that she believed that this issue would dealt with by the PFD Division. 8:13:23 AM SHARON BARTON, Director, Permanent Fund Dividend Division, Alaska Department of Revenue, explained that when filling out the PFD application, the power of attorney is attesting to all of the information on the application being true so far as that person knows it to be true. CHAIR SEATON asked if the PFD Division sees any problems with HB 201. MS. BARTON replied that logistically the division has no problem with the bill, as it won't put a large new workload on the personnel. She noted that the division is concerned about possible fraud situations. In addition, she pointed out: We are also concerned about it being offered broadly to all military. Our military members across the world are filing very successfully this ... application period for their dividends. We know that those folks in Iraq or Afghanistan, places like that, don't have the ready access to mail and to the Internet, although they do, almost all of them, have access eventually. ... We have a lot of support built into our processing system now to allow plenty of time, all the time they need, to get their applications in when they return to a place in the world they can file or can supply that additional information they need. But if the committee is interested in making this available to military members, we would ask that you consider at any rate restricting it to those who are receiving hostile fire or imminent danger pay.... 8:16:59 AM CHAIR SEATON asked if Ms. Barton had any suggested language for that. MS. BARTON responded that she did not have it with her but would be available to work on the language for an amendment. 8:17:39 AM REPRESENTATIVE GARDNER asked Ms. Barton if she was implying that she didn't see the need for this bill. MS. BARTON answered that division personnel have heard some complaints from people who have been frustrated with the current system, mostly from family members of the military servicemen. She noted that she personally only knew of one particular such case. She said, "Staff tell me when I poll them that they've been able to work through every situation with the calls and letters and emails that they've received about the military. ... It mostly has to do with the delay in receiving the PFD check when they get back to the States. ... But in no case are we denying anyone." REPRESENTATIVE RAMRAS commented that he felt HB 201 would make it easier for military personnel that are in harm's way to apply for the PFD. 8:20:08 AM CHRIS POAG, Civil Division, Alaska Department of Law, explained: A typical power of attorney has two parties: one's the principal - that's the person who's represented, the military person who goes overseas; and the other's the agent, or attorney-in-fact - that's the person who's going to do any benefit applications on behalf of the principal. In that scenario, ... the agent's responsible in a [PFD] application to make representations about whether or not the principal is in fact eligible. ... We have to assume that they'll get that information directly from the principal instead of from some sort of second-hand source. But when they make that information available in the application and they turn that application in, it more becomes a question probably in a prosecution sense of who made the representation. MR. POAG explained that either the principal provided the agent with false information, or the agent made a mistake on the application. Fraud refers to false information that is purposefully provided, he noted, not unknowingly provided. Under HB 201, he said: This is just going to be very hard, if not impossible to prosecute because you're going to have people pointing the finger at each other saying, 'Well, they told me this,' and 'They told me that.' And it's going to be real hard to prove beyond a reasonable doubt that anybody knowingly made false representations in that [PFD]. So I think pretty much we'll be giving up any prosecutions in these cases. It would be very difficult to do otherwise. 8:22:07 AM MR. POAG continued: As you know, when you file for your [PFD] application, you have to make a representation that the information is correct, and that you intend to remain in Alaska indefinitely, or, if you're Outside, that you intend to return and remain indefinitely. Obviously an agent on behalf of a principal can't make intentional statements for them. So we also gave up that portion of our application requirement. 8:23:54 AM REPRESENTATIVE GATTO stated that a crooked person could file as power of attorney for someone and have the PFD check placed into his or her own account. He asked what the PFD Division could do about this. MR. POAG replied: It depends a lot on the form of the power of attorney that's been drafted. And it depends probably a little bit on the way this legislation's drafted as well. A typical power of attorney that has normal powers, not specific powers, ... would be entitled to [have] that check ... put into the account that they designated; they are [the] agent, they make decisions as to where the money goes and how it's spent and all of those sorts of decisions. So that crooked person could end up with [the principal's] PFD in their [own] account. REPRESENTATIVE GATTO asked who becomes the liable person in this case. MR. POAG replied that it would depend on who made the misrepresentation. He commented that the state will have a difficult time determining which one was lying if they are blaming one another. 8:25:54 AM MR. POAG, in response to Representative Gatto, stated that a person cannot fill out a PFD application for his/her spouse. REPRESENTATIVE GATTO commented that the bill would then be saying that the power of attorney trumps marriage. MR. POAG responded: I think this is probably why ... allowing power of attorneys has been a sort of a guarded exception. It's been for, essentially, a parent on behalf of a child [to make] ... representations as to whether or not their child intends to return or remain in Alaska and stay there indefinitely. And this [bill] is a situation where we're broadening the scope of that exception. MR. POAG pointed out that current law allows for a military person to late file after he/she has returned from the hot zone. 8:28:05 AM REPRESENTATIVE RAMRAS stated that Fort Wainwright and Fort Richardson will both be having large deployments this year, and he saw that the deployment newsletters address issues like how to give one's spouse the power of attorney. He asked for confirmation that the bill would make the power of attorney applicable specifically to the PFD because it comes under the purview of the State of Alaska. MR. POAG replied that current PFD law says that only the individual can apply for his or her own PFD, and the only exceptions for that are for a child or for somebody who is incapacitated. He stated that HB 201 would create a third exception for military persons. He noted, "The bill as drafted doesn't have any 'hot zone' language. As drafted it would be anybody in the military outside of the United States." 8:29:25 AM REPRESENTATIVE RAMRAS commented that this was a particularly timely bill because of the large deployments scheduled for this year. REPRESENTATIVE GARDNER asked if there is any reason that those individuals being deployed this fall couldn't apply for the PFD before they leave. MR. POAG replied that they can apply between January 1 and March 31. 8:30:36 AM REPRESENTATIVE GARDNER asked if a military person doesn't come back, for any reason, if the spouse or power of attorney can continue to apply for the PFD on behalf of that person year after year. MR. POAG replied that if the principal abandoned his/her intent to return to Alaska, then the agent or spouse should not be filing on the principal's behalf. He stated that if the agent was representing in the application that the principal was outside of Alaska, at some point the principal would no longer qualify for an Outside allowable absence exception. He said that if the language of this bill were to be drafted such that the agent can only file while the principal is in the hot zone outside of the United States, then that would at some point expire, and the agent would probably be caught. He noted, "It would depend on the drafting of this bill." 8:32:12 AM MR. POAG, in response to Chair Seaton, reiterated that as the bill is currently drafted, it allows anyone on active duty outside of the United States to apply through a power of attorney, even if the individual is not in a hot zone and is gone for a long time. He said that if the bill were limited to hot zones, it would be easier for the PFD Division to investigate possible frauds. 8:33:14 AM REPRESENTATIVE GATTO asked if there is any place in the world that does not qualify as a hot zone. MR. POAG replied that as he understood it, being in a hot zone would require a person to qualify for a certain type of military pay status. REPRESENTATIVE GATTO asked if the term "hot zone" is actually defined. MR. POAG replied yes; it's an official pay status that one receives in the military. CHAIR SEATON closed public testimony. 8:34:32 AM CHAIR SEATON asked Ms. Wright to address the issue of the inability to enforce an intent to return provision if the PFD application is completed through a power of attorney. MS. WRIGHT presented an example of an individual who defrauded the PFD Division and was reported, but the division never pursued the case. She said, "I guess in life we have to realize that if somebody is out to circumvent the system, they're going to circumvent it no matter what rule we come up with, no matter what changes we make." She reiterated that the purpose of the bill is to allow the military personnel to have an easier way to apply for the PFD. She noted that hot zone pay can change quickly. She said, "I strongly believe this 'hot zone' language should not be in [the bill]." Representative Chenault's office devotes a lot of time to military-PFD problems, she stated. 8:38:51 AM REPRESENTATIVE ELKINS asked why the power of attorney couldn't specify that it was only good for applying for the dividend. MS. WRIGHT answered that there is an area on the power of attorney [application] that would allow a person to write in that the agent has permission to file for a PFD. 8:40:46 AM REPRESENTATIVE RAMRAS reiterated that soldiers from Alaska will be deployed overseas this year and the military has recommended that the soldiers set up a power of attorney. He emphasized that the bill should be passed quickly. MS. WRIGHT concurred with Representative Ramras and said the bill is long overdue. She said, "We have afforded the [PFD] Division every opportunity. At the beginning of session we brought them in, told them what the problem was, gave them every opportunity to repair it, and [they] chose not to." 8:42:30 AM REPRESENTATIVE GARDNER said that she applauds the effort of the bill, but she wonders if a better plan would be to make the application available early for people who are leaving. MS. BARTON replied that Representative Gardner's proposal could perhaps be worked into the law. She noted that the problem is that the eligibility period covers the full year prior to the dividend, from January 1 to December 31. If someone filled out the application in August, "it's unknown what might occur to them between August and January as far as their eligibility for the dividend." The law requires that the applicant attest to the fact that during the prior eligibility year certain things have been true, she said. 8:44:35 AM CHAIR SEATON requested that for the next hearing, Ms. Barton present data on the number of applications that have had problems on this particular aspect of the PFD application "so we have a good handle on the numbers and those that were denied, or missed or filed late under the current existing law." 8:44:54 AM MS. BARTON, in response to Representative Gatto, replied that under the law, a person would be committing fraud if he/she filled out a spouse's application with the spouse's e-signature. [HB 201 was heard and held.]