SSTA - 2/7/95 SB 40 APPROP: AHFC TO GENERAL FUND  TAPE 95-3, SIDE A Number 001 CHAIRMAN SHARP calls the Senate State Affairs Committee to order at 3:35 p.m. and brings up SB 40 as the first order of business before the committee. Number 025 CHAIRMAN SHARP, the prime sponsor of SB 40, reads the sponsor statement for the bill. Number 085 CHAIRMAN SHARP asks Mr. Welker to testify. Number 090 RANDY WELKER, Legislative Auditor, states the Division of Legislative Audit performed an audit of AHFC in February, 1994. One of the concerns that initiated the audit was that when AHFC has been asked in the past whether there is any excess cash in the corporation to which the legislature could have access, the corporation always responds that all assets are tied up, and that the bond covenants and the restrictions imposed by the bonds preclude any extraction of cash. Last session the Legislative Budget & Audit Committee authorized the Division of Legislative Audit to perform an audit. The focus of the audit was to identify any and all surplus cash that may be available to the legislature. The conclusion of the audit was that 535 million dollars could be extracted over FY 94, 95, and 96 without impairing AHFC's ability to continue the programs in place at the time. There was some concern on the part of Legislative Audit and AHFC that the extraction of surplus cash might affect the bond rating of the corporation. However, since the extraction of 200 million dollars last session, there has been no negative impact on the corporation's bond ratings. One of the bond rating agencies did put AHFC on an alert, but AHFC's bond rating did not drop. Number 130 MR. WELKER states the legislature did extract less than the amount available for extraction last year. So there are excess funds still available. Legislative Audit is updating last years analysis at the request of the Budget & Audit Committee. We intend to have a report at Thursday's Budget & Audit Committee meeting providing updated numbers. Number 165 MR. WELKER states that the Legislative Budget & Audit Committee conducted an oversight hearing on AHFC on Thursday, February 2, 1995. The primary topic of that hearing was the recent 5% mortgage program. That topic will be continued at this week's Legislative Budget & Audit Committee hearing on Thursday, February 9, 1995. Legislative Audit has been asked to research the use of arbitrage earnings of the corporation. We have also been asked to look at some aspects of the proposed consolidated office building that AHFC is in the process of constructing in Anchorage. Thursday's hearing will deal exclusively with AHFC matters. Number 185 CHAIRMAN SHARP states that the intent of SB 40 is to keep AHFC in the forefront. The next referral of SB 40 is to the Senate Finance Committee. Senator Sharp would just as soon move SB 40 up to the Finance Committee, so that it would be available for consideration in that committee. Number 200 SENATOR RANDY PHILLIPS makes a motion to discharge SB 40 from the Senate State Affairs Committee with individual recommendations. Number 202 CHAIRMAN SHARP, hearing no objection, orders SB 40 released from committee with individual recommendations.