Legislature(2019 - 2020)SENATE FINANCE 532
02/10/2020 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB139 | |
| HB68 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 139 | TELECONFERENCED | |
| *+ | HB 68 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 139
"An Act providing an exemption from the state
procurement code for the acquisition of investment-
related services for assets managed by the Board of
Trustees of the Alaska Permanent Fund Corporation."
9:02:27 AM
REPRESENTATIVE JENNIFER JOHNSTON, SPONSOR, discussed the
legislation. She stated that the gill granted an exemption
from the state procurement code for the Alaska Permanent
Fund Corporation. She stated that current laws exempted the
corporation from procurement code when it required income-
producing assets or delegated investment authority, however
they must comply with the state's procurement code in
evaluating and managing the asset in which they possess.
Currently, when the corporation evaluated those types of
investments, they needed to hire third-party experts and
also go through the procurement code to secure the experts.
She stated that if the organization did not have time to
adhere to the code, but feel the fund was worthy, they
would hire a fund manager expert.
Senator Olson wondered why the idea had not been presented
in the past.
Representative Johnston replied that Ms. Rodell could
further address the question.
Co-Chair von Imhof stated that Ms. Rodell would be
available for testimony and questions. She wondered whether
the Permanent Fund Corporation was in support of the bill.
9:05:20 AM
ANGELA RODELL, EXECUTIVE DIRECTOR, ALASKA PERMANENT FUND
CORPORATION, stated that procurement code exemption had
been pursued by the corporation for a long time. She spoke
in support of the bill.
Senator Wielechowski noted the 1993 attorney general
opinion on this issue, which refused to exempt the
corporation from the procurement requirement. He queried
the current urgency. He stressed that the purpose of the
procurement laws was to prevent contracts to friends,
political allies, supporters, paybacks, and hasty contract
decisions that could lead to negligent hiring of
contractors.
Ms. Rodell stressed that much had changed since the asset
allocation of the fund in 1993. The ability to be a prudent
investor was on the books since 2005. She stressed that
there was a responsibility to deliver an amount that was
substantial for the purpose of state government. She noted
that the success depended upon the trust of Alaskans.
Senator Wielechowski felt that maintaining the trust of
Alaskans was the purpose of the procurement code. He
wondered whether there was a way to clear experts of
certain areas need under the current code.
Ms. Rodell replied that ideas may come up, so having a long
list of possible contacts was not feasible, because the
experts were not known in advance.
Senator Wielechowski queried the anticipated costs with the
contracts, and how those contracts would be paid.
Ms. Rodell replied that the money would come from the
operating budget, which was from the Earnings Reserve
Account.
9:10:39 AM
Co-Chair von Imhof pointed out that much had changed since
1993. She stressed that the investment market had
exponentially grown. She remarked that it was important to
respond quickly and give the corporation the flexibility in
the responsibility to provide 60 to 70 percent of the
state's revenue. She remarked that there was a precedent in
other corporations that had flexibility in the procurement.
She remarked that there was a need to invest in many
different vehicles in order to be diversified and
thoughtful.
Senator Olson remarked that changes to the already
successful structure in the corporation made people
uncomfortable. He wondered how the trust would be
maintained by the people of Alaska.
Ms. Rodell replied that the bill did not address the Alaska
Retirement Management Board (ARMB), and noted that ARMB had
more procurement flexibility than the Alaska Permanent Fund
Corporation had under the legislation. She hoped that the
transparency of the corporation allowed for the recognition
of the trust of Alaskans.
9:15:54 AM
Co-Chair von Imhof stressed that the Permanent Fund Board
meetings were open to the public, and the financials were
also available to the public.
Senator Wielechowski noted the existing exemption in the
procurement code for the Board of Trustees. He wondered
what types of contracts would be addressed in the current
bill that the current exemption did not already cover.
Ms. Rodell replied that those contracts that exist under
the current exemption had a fiduciary responsibility. The
contracts in the bill required expertise.
Senator Bishop wondered whether there was anticipation of
contracting with existing contractors in the organization.
Ms. Rodell responded that it could be both.
Co-Chair von Imhof wondered whether the Alaska Housing
Finance Corporation (AHFC) had a similar exemption.
Ms. Rodell replied in the affirmative.
Senator Wielechowski queried the process of issuing the
contracts.
Ms. Rodell replied that the contract would be decided
internally by the staff, and she or the CEO would sign off
on it.
9:20:10 AM
Co-Chair von Imhof wondered whether there would be any
ability for the public to see the results of the decisions.
Ms. Rodell replied that it was mostly protected under non-
disclosure agreements, because when one evaluates the
investment there should not be a signal of interest too
early.
Senator Wielechowski surmised that the public would not be
aware of the hired experts.
Ms. Rodell agreed to provide the information.
Senator Olson wondered whether there was consideration
about adding a sunset date to the bill.
Representative Johnston replied that she did not see a need
for the sunset date in the bill. She felt that it was
needed to catch up to the sophistication of the fund.
Senator Olson felt that there was almost pessimistic about
the return of investment in the current structure.
Representative Johnston restated that she did not see a
need to keep it the same structure.
9:25:33 AM
Senator Olson remarked that the success had to do with the
stock market, so he felt that there would be a correction.
Co-Chair von Imhof stressed that there should not be
speculation about the stock market activity.
Senator Bishop wondered how much money would be affected by
the legislation.
Ms. Rodell replied that it would be under $1 million
throughout a fiscal year.
Senator Bishop wondered how much was in the investment
fund.
Ms. Rodell replied that the fund was currently estimated at
approximately $67.8 billion.
Senator Bishop stated that he had a question for
Legislative Legal. He remarked that the Legislative Budget
and Audit Committee had the ability to deeply examine the
investments.
Co-Chair von Imhof felt that it was of the highest use to
meet the prudent investor rule to examine the underlying
investments in any particular investment vehicle.
Senator Wielechowski saw the benefits of the legislation,
but remarked that there were no spending caps in the bill.
Ms. Rodell stressed that the corporation was limited every
year by its budget.
9:30:07 AM
Senator Wielechowski queried support of adding a spending
cap to the bill.
Ms. Rodell replied that that she did not believe a cap was
necessary, because by definition there would be a cap in
the budget process. She stated that she did not support a
cap.
Senator Wielechowski wondered whether there was support for
a provision that said that the corporation must provide the
information to the legislature.
Ms. Rodell suggested that if the amendment went through the
process, she would support it.
Senator Wielechowski stressed that he did not want to
provide more power, rather he wanted to restrict power.
Co-Chair von Imhof OPENED and CLOSED public testimony.
Co-Chair Stedman felt that there could be an update on the
powers of Legislative Budget and Audit.
HB 139 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB139 APFC Statement.pdf |
SFIN 2/10/2020 9:00:00 AM |
HB 139 |
| HB 139 APFC Response 5.11.19.pdf |
SFIN 2/10/2020 9:00:00 AM |
HB 139 |
| HB139 Testimony - Received by 4.25.19.pdf |
SFIN 2/10/2020 9:00:00 AM |
HB 139 |
| HB 139 Sponsor Statement 2.5.2020.pdf |
SFIN 2/10/2020 9:00:00 AM |
HB 139 |
| HB 68 Explanation of Changes v. A to U.pdf |
SFIN 2/10/2020 9:00:00 AM |
HB 68 |
| HB 68 Sectional Analysis v. U 5.7.2019.pdf |
SFIN 2/10/2020 9:00:00 AM |
HB 68 |
| HB 68 Transmittal Letter 2.19.2019.pdf |
SFIN 2/10/2020 9:00:00 AM |
HB 68 |
| HB 68 DOLWD Response 2.11.2020.pdf |
SFIN 2/10/2020 9:00:00 AM |
HB 68 |
| HB 139 APFC Response SFIN 2.13.2020.pdf |
SFIN 2/10/2020 9:00:00 AM |
HB 139 |