Legislature(2013 - 2014)CAPITOL 106
01/31/2013 08:00 AM House STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB75 | |
| HB10 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 75 | TELECONFERENCED | |
| *+ | HB 10 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 75-CONTRIBUTION FROM PFD: AUDITS; UNIVERSITY
8:05:32 AM
CHAIR LYNN announced that the first order of business was HOUSE
BILL NO. 75, "An Act repealing certain audit requirements for
entities receiving contributions from permanent fund dividends;
requiring each campus of the University of Alaska to apply to be
included on the contribution list for contributions from
permanent fund dividends; and requiring a university to pay an
application fee for each campus separately listed on the
contribution list for contributions from permanent fund
dividends."
8:05:50 AM
REPRESENTATIVE PAUL SEATON, Alaska State Legislature, presented
HB 75 as sponsor. He reviewed that the "Pick.Click.Give"
program was established by the [25th Alaska State] Legislature
as a simple way for Alaskans to designate a portion of their
permanent fund dividend (PFD) as a donation to charities.
Currently, he stated, nonprofit organizations with a total
budget of less than $250,000 are exempt from the financial audit
required of nonprofit organizations with a total budget of
$250,000 or greater wishing to participate in Pick.Click.Give.
He clarified that the audit is a financial one done by a
certified public accountant (CPA); it is not an Internal Revenue
Service (IRS) audit. He reviewed that the IRS 990 form,
[included in the committee packet], is 12 pages in length, was
revised in 2008, and not only ensures nonprofit organizations'
income and expense numbers match, but also considers conflicts
of interest and governance.
8:07:55 AM
REPRESENTATIVE SEATON explained that the current audit
requirement is problematic for a nonprofit organization that,
for example, makes $260,000 a year, because the cost of the
audit is $7,000-$12,000. He opined that the purpose of a
nonprofit organization is to accomplish its mission, not to
employ CPAs. Representative Seaton said there is no question
that CPA audits are best practices; however, he said the
question is whether the state should require a CPA audit from a
small entity simply to allow people to donate money to that
entity. He questioned why it is necessary to disadvantage a
smaller nonprofit organization with an onerous requirement that
is not required of larger nonprofit organizations until they
reach $500,000 in federal funds.
REPRESENTATIVE SEATON relayed that many people who did not see
their charity on the Pick.Click.Give list mistakenly interpreted
that to mean that the charity had lost its nonprofit status,
which he said is "another reason to get rid of this." He said
The Rasmuson Foundation and other entities are trying to make it
very easy for people to donate to the organizations they support
and are happy to have more nonprofit organizations participate
in the Pick.Click.Give program.
8:11:20 AM
REPRESENTATIVE SEATON said the proposed legislation would also
correct an oversight in the original legislation. He explained
that all the nonprofits pay a $250 administrative fee, but the
University of Alaska campuses were left out of that requirement.
He offered his understanding that the University of Alaska does
not mind being asked to pay that fee.
8:12:21 AM
REPRESENTATIVE SEATON, in response to the chair, relayed that
the CPA audit looks at finances and account balancing, not
whether the expense should have been made. He said the idea for
the bill came from a complaint from the Seward Senior Center in
Seward, Alaska, which was generating $3,000-$4,000 in donations,
while facing an audit that was going to cost $12,000. He
remarked that the CPA audit is not even reviewed. In response
to a follow-up question, he clarified that a CPA audit would not
determine the legitimacy of a nonprofit organization; that is
something the IRS would do.
8:15:26 AM
REPRESENTATIVE GATTIS said she understands best practices, but
questioned what the other purpose of the [CPA] audit could be.
She asked if the audit is open to the public.
8:16:23 AM
HEATHER BEGGS, Staff, Representative Paul Seaton, Alaska State
Legislature, on behalf of Representative Seaton, sponsor of HB
75, stated, "Both the 990 and CPA audits do report some program
activities of nonprofits." She said the IRS 990 form is more
detailed. She said both documents are open to the public;
although the 990 form is more accessible. She relayed that with
the revisions made in 2008, "nonprofits are penalized $20 a day
every day after five days that they would refuse giving a 990 to
a donor." The CPA audit is an internally managed file that
should be given but is not required to be given [to the public],
she said.
REPRESENTATIVE GATTIS asked Ms. Beggs to confirm that [the CPA]
audit will not necessarily clarify for donors how their money is
spent.
MS. BEGGS answered that is correct.
8:17:47 AM
REPRESENTATIVE KELLER asked if any nonprofit 501(c)(3) willing
to fill out the 990 form is eligible to be listed in the
Pick.Click.Give program.
8:18:23 AM
MS. BEGGS answered that there are other requirements, upon which
she suggested the Foraker Group could expound, but said every
organization must be a 501(c)(3), which is why the bill sponsor
feels the 990 form is the best accountability (indisc. -
overlapping voices). In response to follow-up questions, she
indicated that the status of the University of Alaska is
specified in statute, and she offered her understanding that the
university is "the only other exception," but again deferred to
the Foraker Group for further details.
REPRESENTATIVE KELLER stated support of the sponsor's "getting
this through."
8:19:43 AM
REPRESENTATIVE KELLER stated his belief that the audit became an
eligibility requirement because the bar was so high. He said he
thinks it is great to take that bar away, as long as everybody
gets "a fair shake," and he questioned whether "we" are prepared
to make sure everyone can apply on equal terms. He mentioned
public schools. He said he was thinking about religious
nonprofit organizations and "how that eligibility is required."
He indicated that the IRS has made changes related to 501(c)(3)
organizations, but stated that "they weren't that difficult."
8:20:51 AM
REPRESENTATIVE SEATON said the general purpose of [the
Pick.Click.Give program] is to enable people to give donations
with ease. He said generally people give money to organizations
they know. He stated that really small organizations are
already exempt; [the proposed] legislation is designed for those
organizations with budgets over $250,000.
8:23:22 AM
REPRESENTATIVE KELLER said he understands the purpose of the
proposed legislation, but clarified that he wants to know if
[the division] is prepared for the increased number of nonprofit
organizations that might participate in Pick.Click.Give if HB 75
passes. Further, he expressed concern that there would be an
equal basis of qualification for all charities.
REPRESENTATIVE SEATON responded that HB 75 would get rid of
inequality. Regarding the concern about being prepared for the
change, he noted that representatives from the Rasmuson
Foundation and the division were available to testify. He
related that "they" have not expressed concern about the
additional work that may result from allowing more nonprofit
organizations into the Pick.Click.Give program.
8:26:29 AM
MS. BEGGS, in response to Representative Isaacson, stated that
the 990 forms were all changed in 2008 and are "tiered" to
accommodate organizations with smaller budgets, but still
include "all the same accountable categories."
REPRESENTATIVE ISAACSON asked if the intent of HB 75 is to allow
nonprofit organizations to use whichever form they file to the
IRS as the form they submit to the Pick.Click.Give program.
REPRESENTATIVE SEATON answered that is correct.
8:28:46 AM
REPRESENTATIVE HUGHES noted that the 990 form lists the purpose
of the nonprofit organization. She further noted that 990 forms
can be accessed easily on line. She offered her understanding
that [Alaska] has one of the highest nonprofit organizations to
population ratios, which she said could mean a long list
burdening the division; however, she recollected hearing about a
requirement wherein "they have to receive a certain amount of
their revenue income via donations" - an amount that she said
seemed high, such as $100,000 - and she suggested that that
detail could limit the rise in program participants.
8:30:26 AM
MS. BEGGS suggested that Representative Hughes might be
referring to the "one-third public support test," which is part
of the 990 form requirement for nonprofit organizations, but not
part of the Pick.Click.Give application.
8:30:50 AM
REPRESENTATIVE KREISS-TOMKINS pointed to a research brief from
Legislative Legal and Research Services, dated 1/24/13, in which
it is noted that Diane Kaplan, president of the Rasmuson
Foundation, testified in 2007 that there were budget and
staffing requirements related to qualifications of a nonprofit
organization to take part in the Pick.Click.Give program. He
asked for details regarding those requirements.
8:31:22 AM
MS. BEGGS deferred to other testifiers to answer further
questions.
8:32:02 AM
MIKE WALSH, MPA, Ph.D., Vice President, Operations, Foraker
Group, in response to the chair, explained that the Foraker
Group is a 501(c)(3) nonprofit management core organization
whose job is to strengthen nonprofit organizations through
education, training, organizational development, and shared
financial human services. In response to [Representative
Hughes'] previous mention of a $100,000 price point, confirmed
that that pertains to a requirement of the Pick.Click.Give
program wherein an organization must receive 5 percent or at
least $100,000 of its revenue from donated sources. In response
to Representative Isaacson, he clarified, "... whichever is the
lower."
8:34:38 AM
DR. WALSH, in response to a question from Representative Keller,
stated that there is little administrative burden anticipated as
a result of HB 75, because the process for taking in
applications is on line and simple.
8:36:19 AM
KATHLEEN LIGHT, Executive Director, Ketchikan Arts and
Humanities Council (KAHC), testified in support of HB 75. She
stated that KAHC cannot participate in the Pick.Click.Give
program because it is too great a financial burden to do so.
She said the program is an extraordinary means to increase
funding for many nonprofit organizations, as well as a
philanthropic opportunity for Alaskan citizens, and
participation in the program gives a "stamp of approval" to an
organization; however, ironically the program disenfranchises
those organizations that cannot participate because of its cost.
Ms. Light said KAHC receives numerous calls from people asking
why the council is not in the Pick.Click.Give program, and has
discovered later that those people are not donating money to the
council, because they have already given through the
Pick.Click.Give program. Under HB 75, she said, KAHC would be
financially able to participate in the Pick.Click.Give program.
MS. LIGHT relayed that KAHC was established in 1953, has been a
nonprofit organization since 1970, and has a budget of
approximately $320,000. She said the council receives grants
from the City of Ketchikan, the Ketchikan Borough, the State of
Alaska, the Alaska State Council on the Arts, the National
Endowment for the Arts, Westaff (ph), the Rasmuson Foundation,
and the Murdock Trust. She said it is not unusual for nonprofit
organizations in Alaska to receive grants from so many different
sources, all of which require the 990 form, which is "sufficient
for them in reviewing our finances and our standing as a good
nonprofit."
8:39:46 AM
ANGELA RODELL, Deputy Commissioner, Department of Revenue (DOR),
said she was present to answer questions on behalf of the
Permanent Fund Division. In response to a question from
Representative Keller, she stated that HB 75 would not place
additional burden on the Permanent Fund Division, and said the
department is comfortable with the affect the proposed
legislation may have. In response to a follow-up question, she
said the $250 application fee would sufficiently cover the
division's cost in running the Pick.Click.Give program. In
response to the chair, she confirmed that the fiscal note is
zero because there would be no additional cost to the division
as a result of HB 75.
8:41:28 AM
DANA PAPERMAN, Executive Director, Seward Senior Center,
testified in support of HB 75. She related that the Seward
Senior Center has served seniors and social services for 35
years. She thanked the bill sponsor for bringing forth the
legislation under House Bill 302 in 2012 and again as HB 75 this
year. She said the Seward Senior Center became a
Pick.Click.Give recipient in the first year of the program, and
it received $50 from those known personally to the center. Ms.
Paperman indicated that she worked in partnership with the
Seward Community Foundation, which helps finance direct
marketing in the community, to increase local awareness of the
Pick.Click.Give program and the recipients in Seward who benefit
from it, and in the second year of the Pick.Click.Give program
the Seward Senior Center received $1,100, again coming from
friends of the center. However, she stated that in 2011, the
center's budget climbed above the $250,000 mark that requires
the audit, which is a financial burden on the Seward Senior
Center. She said the Pick.Click.Give program created a valuable
avenue for the center to increase its unrestricted funds without
creating a burden on the center's funds or operating staff. She
encouraged the committee to support HB 75 and to help Alaska's
nonprofit organizations.
8:43:23 AM
CHAIR LYNN, after ascertaining that there was no one else who
wished to testify, closed public testimony.
8:43:33 AM
REPRESENTATIVE KELLER said he thinks HB 75 is a good bill, and
he expressed his hope that the testimony that had been heard
would be helpful in continued process of hearing the bill.
8:43:54 AM
REPRESENTATIVE GATTIS commented that the proposed legislation
would provide generous Alaskans the opportunity to give where
they choose, and she said she cannot find a problem with [the
proposed legislation].
8:44:15 AM
REPRESENTATIVE GATTIS moved to report HB 75 out of committee
[with individual recommendations] and the accompanying zero
fiscal notes. There being no objection, HB 75 was reported out
of the House State Affairs Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 1 HB0075A.pdf |
HSTA 1/31/2013 8:00:00 AM |
HB 75 |
| 2 HB 75 sponsor statement.pdf |
HSTA 1/31/2013 8:00:00 AM |
HB 75 |
| 3 HB 75 About Pick.Click.Give.pdf |
HSTA 1/31/2013 8:00:00 AM |
HB 75 |
| 4 HB 75 Alaska Statute 43.23.062.pdf |
HSTA 1/31/2013 8:00:00 AM |
HB 75 |
| 5 HB 75 IRS Form 990 for tax-exempt organizations.pdf |
HSTA 1/31/2013 8:00:00 AM |
HB 75 |
| 6 HB 75 Letters of Support.pdf |
HSTA 1/31/2013 8:00:00 AM |
HB 75 |
| 7 HSTA Research HB 75 1-24-2013 13-157.pdf |
HSTA 1/31/2013 8:00:00 AM |
HB 75 |
| 8 HB075-DOR-PFD-01-30-13.pdf |
HSTA 1/31/2013 8:00:00 AM |
HB 75 |
| 1 HB 10 v. A.pdf |
HSTA 1/31/2013 8:00:00 AM |
HB 10 |
| 2 HB 10 Sponsor Statement for v. A.pdf |
HSTA 1/31/2013 8:00:00 AM |
HB 10 |
| 3 HB 10 Sectional Analysis for v. A.pdf |
HSTA 1/31/2013 8:00:00 AM |
HB 10 |
| 4 HB 10 Legal Opinion - Exec. Ethics.pdf |
HSTA 1/31/2013 8:00:00 AM |
HB 10 |
| 5 HB 10 Regulations 9 AAC 52-040.pdf |
HSTA 1/31/2013 8:00:00 AM |
HB 10 |
| 6 HB 10 Regulations 9 AAC 52-045.pdf |
HSTA 1/31/2013 8:00:00 AM |
HB 10 |
| 7 HB010-LAW-CIV-01-25-13.pdf |
HSTA 1/31/2013 8:00:00 AM |
HB 10 |