Legislature(1999 - 2000)
03/09/1999 01:45 PM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
HOUSE JOINT RESOLUTION NO. 13
Relating to using oil spill settlement funds to create
an endowment for the sciences at the University of
Alaska.
CO-CHAIR GENE THERRIAULT stated that HJR 13 would support
recent action of the Exxon Valdez Oil Spill (EVOS) Trustees
to create a long-term research and monitoring endowment
using $115 million dollars of the expected reserve.
The EVOS Trustee Council allocates money obtained from
settlement of the Exxon Valdez spill litigation. Over the
years, EVOS funds have largely been used to purchase land
for habitat preservation. The Council has been lacking in
the area of research, leaving a gap in understanding future
spills and how to respond to them. It would be beneficial
to know if types of marine ecosystems are extra sensitive to
certain cleanup activities, and if so, how to respond to
spills in those areas.
Co-Chair Therriault concluded that an endowment of this
nature would fulfill the intent of the Exxon Valdez Spill
settlement and the mission of the Trustee Council, which is
to restore, rehabilitate, replace, enhance, and acquire
equivalent resources and services in the oil spill regions.
Representative Austerman questioned how many endowed chairs
there would be. Co-Chair Therriault explained that number
has not yet been determined. It would depend on what the
Trustees ascertained appropriate. The chairs would be
involved in the areas of research instruction and public
service on spill impacted areas.
Representative Austerman voiced concern that $2-$3 million
dollars would be used to cover chair costs and, that
additionally, the University would be supplemented with
research money. He requested that the University submit a
program intent list for use of these funds. Co-Chair
Therriault advised that the proposed bill asks that the EVOS
Council consider this proposal and pointed out that this
entity operates completely independent of the Legislature.
Representative J. Davies commented that the endowment would
be established by the Trustee Council. They are required to
see that funding is spent appropriately. He added, when an
endowed chair is established, the endowment will generate
usually five times other research in that area, thus, income
would be leveraged by that factor. Representative J. Davies
instructed that a researcher can not operate in a vacuum;
they are dependent on accessing utilities and facilities
that a university system can offer. Support functions for
research are audited by the Department of Defense.
Co-Chair Therriault envisioned that the Trustees could endow
a chair at the University. That chair would most likely be
an expert in marine sciences, and could provide them with
advice.
Representative Austerman suggested that there could be other
research organizations that would like to be a part of the
process. He urged that this be a competitive bid for the
EVOS Council to consider. Co-Chair Therriault explained
that the actual research was separate from the endowment of
the chair. If the EVOS Council was going to endow chairs to
help oversee proposals, they would most likely choose a
university. He ascertained that the Alaska State
Legislature would want them to consider the Alaska
University system. The proposed legislation only states
that Alaska should use a portion of the funds for endowed
chairs.
Representative Bunde shared concerns voiced by
Representative Austerman regarding administrative overhead
costs.
In response to Representative Bunde, Co-Chair Therriault
stated that the grants are not a moneymaker for the
University; although, they would help to spread the fixed
costs of the University system over a larger pool.
Representative Bunde responded that it would add to the
University's cash flow.
Representative Austerman suggested language written on Page
4, Line 5 be replaced with "relevant areas or research".
WENDY REDMAN, VICE PRESIDENT, UNIVERSITY OF ALASKA-STATEWIDE
SYSTEM, FAIRBANKS, disagreed with Representative Austerman
that the endowment chairs do not pay attention to what is
requested. The EVOS Trustee Council is a very political
body. The intent of the resolution will have an impact on
that body. What the University envisions would be
particularly in the areas of research and public service.
In the public service area, there exists faculty in the
cooperative extension service and through the marine
advisory program. She noted that those are the primary arms
which have dealt with impact and the effects of spill in
that region.
Ms. Redman continued, the two key areas of focus for the
Trustees have been:
? The need for continual and long term research; and
? Providing a way to get all the research previously
undertaken out to the public. The research does
not do any good unless it is used. That research
needs to be translated into documents.
Ms. Redman addressed the issue of endowed shares. She
stated that the University would treat these type of endowed
shares like any other donations made to the University.
Essentially, it passes to the University of Alaska
foundation, and then like a donation, it would be decided
how to spend those funds, then establishing a work plan for
that chair.
Representative J. Davies pointed out that one of the key
elements for a long-term research plan is graduate students.
Major amounts of research are not undertaken without some
graduate students working on the program.
Representative G. Davis referenced Page 2, Line 23, and
asked why those locations were classified. Ms. Redman
replied those units were either affected or have programs
with faculty that work there.
Representative Austerman asked about the price tag of $2-$3
million dollars per chair. Ms. Redman stated that it would
be closer to $2 million dollars if there are no graduate
students involved. Representative Austerman asked what the
$2 million dollars per chair would buy. Co-Chair Therriault
pointed out that it was a small endowment, which spins off a
particular cost of a function. Ms. Redman added that the
actual administrative costs anticipated per year would be
$100 thousand dollars to cover salary benefits, clerical
support, travel, commodities and contractual costs.
TRACY CRAMER, DIRECTOR OF ADMINISTRATION FOR EVOS,
DEPARTMENT OF FISH AND GAME, stated that the EVOS Trustee
Council would like to see the resolution passed because of
investments results. At this point in time, all of the
joint trust funds are in the treasury and are invested in
treasury securities with an average of 100 days security.
Currently, the treasury is earning 4.5% to 5% on a large
amount of money.
Ms. Cramer spoke to the issue of the endowed shares. She
stated that the Trustee Council would consider the endowed
shares, however, the federal trustees are concerned that
given their trust responsibility, they may not be able to
hand over a sum of funds, even with an agreement to the
University of Alaska.
Representative Austerman asked if the resolve to the endowed
chairs was not included in the legislation, would the EVOS
Council still support the bill. Ms. Cramer replied that the
Trustee Council does not have an objection to the first
resolve. They would appreciate any assistance that the
Legislature could provide toward their limited authorization
toward investments, addressed by the second resolve.
Co-Chair Therriault examined the way the 1st resolve was
worded and if it would be taken as a "directive". Ms.
Cramer replied that it appeared fine to her.
Representative J. Davies asked information regarding a
recent action creating a long-term endowment. Ms. Cramer
responded that in 1984, the trustee council concluded an
environmental impact statement that analyzed the resources
and services injured. Part of that statement included the
establishment of the restoration reserve. The Trustee
Council has allocated $12 million dollars each year into
that reserve. The basic assumption is that after the last
payment on September 1, 2000, research will continue to be
made by the State.
Ms. Cramer continued, over the last eighteen months, the
Trustee Council has been going through a public review
process regarding how that money should be spent. It
amounts to roughly $170 million dollars. Based on public
comments, the Trustee Council took action on March 1, 1999,
and allocated $150 million dollars for research activities.
It was assumed that this money would continue to be a
perpetual endowment, inflation proofed and that any
expenditures would come after inflation proofing.
Representative J. Davies MOVED an amendment to Page 4, Line
4, deleting "use" and inserting "consider using".
Representative Bunde OBJECTED. He stated that a clear
message should be sent to EVOS. Co-Chair Therriault noted
that he would not object to the language change.
Representative Bunde WITHDREW his OBJECTION.
Representative Grussendorf MOVED to report CS HJR 13 (FIN)
out of Committee with individual recommendations and with
the accompanying fiscal note.
Representative Austerman OBJECTED for the purpose of
discussion. He noted that he was uncomfortable with the
School of Fisheries research history. Representative
Austerman WITHDREW his OBJECTION.
Representative Kohring OBJECTED for the purpose of comment.
He agreed with Representative Austerman, and asked that
other research options should be explored within the private
sector. He added that the legislation was moving away from
the mission of what was intended with the Prince William
Sound and endowing of chairs. He commented that the area
has been studied for the past ten years and asked why
additional research was needed. Representative Kohring
WITHDREW his OBJECTION.
Representative Bunde OBJECTED for the purpose of a
statement. He commented that it was important that the
instructional component not be ignored within the
resolution. Representative Bunde WITHDREW his OBJECTION.
There being NO final OBJECTION, it was so ordered.
CS HJR 13 (FIN) was reported out of Committee with a "do
pass" recommendation and with a zero House Hess fiscal note
dated 3/8/99.
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