Legislature(2001 - 2002)
04/25/2001 09:11 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 92
"An Act relating to removal of members of the board of
trustees of the Alaska Permanent Fund Corporation; and
providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
ROBERT STORER, Executive Director, Alaska Permanent Fund
Corporation, Department of Revenue, outlined the two commissioner
and four members of the public, make-up of the board. He noted the
public members serve staggered four-year terms. He stated the
legislation provides removal for just cause language consistent
with 19 other State of Alaska boards and commissions, including the
Pensions and Investment Board, which is charged with managing the
assets of the state's retirement system.
Mr. Storer told the Committee he has been involved in managing
institution funds for over 20 years, and has seen how managing
funds has become increasingly sophisticated, thus requiring time
for board member's to "get up to speed." This legislation, he
stated, would ensure continuity in fund management and allow
institutional memory to be passed along from outgoing board
members.
Senator Wilken recalled that the legislature attempted to pass
similar legislation approximately five years ago, but the governor
vetoed it. He asked what was different about this bill that the
governor would support.
Mr. Storer affirmed Governor Knowles vetoed the same language in a
different bill, early in his administration. Mr. Storer stated that
the governor has indicated he now supports this provision after
speaking to former trustees and giving the matter consideration.
Senator Ward requested a copy of governor's veto message on the
earlier bill.
Co-Chair Donley asked if the governor has issued a position on the
current legislation.
Mr. Storer responded that before introducing this bill,
representatives of the Corporation including himself, spoke with
the governor and were told he would support this legislation.
Co-Chair Donley suggested that since this language had been vetoed,
a written statement from governor in support of this bill, with an
explanation of why his position changed, is appropriate.
Senator Green asked if "only for cause" is a legal term.
RON LORENSON, outside counsel for the Alaska Permanent Fund
Corporation, responded that there is "a large body of law" dealing
with the subject of "for cause". He stated rather than providing a
definition, these laws review a specific situation and the court
determines whether there is just cause. He referenced a legal
opinion he prepared on the subject of just cause for the
Corporation, which he offered to share with the Committee.
Senator Green requested a copy of the opinion.
Mr. Lorenson said he would provide this. He summarized his
findings, saying, "fair-minded people would know it when they see
it" when taking into consideration performance and conduct. He said
the opinion also states that traditionally the legislature has not
given specific definitions of "for cause".
JOHN KELSEY, former trustee, Alaska Permanent Fund Corporation,
testified via teleconference from Anchorage that he served
continuously on the Board under three different governors from 1987
to 1995. He noted that he served as chair three different times and
was in that position during two occasions when all trustees, except
him, were replaced. He stressed that during these times, he was the
only trustee with the institutional knowledge about the fund's
operation.
Mr. Kelsey urged the Committee to pass SB 192. He cited his
experiences as giving him "great cause" in supporting this bill. He
emphasized he did not wish to denigrate new trustees, attesting
they are excellent appointees. However, he stressed the need for
experienced trustees on the Board to help guide newer trustees. He
asserted the replacement of numerous trustees at one time is,
"unfair to new trustees and it is certainly unfair to the
stakeholders of the fund who own the assets." He asserted that a
new board is understandably cautious and usually fails to make
timely actions. He offered to detail specific occurrences if
requested.
Mr. Kelsey informed he was twice forced into the "uncomfortable"
situation of training a new board, which he surmised was not the
intent of the legislature that created the Corporation.
Mr. Kelsey remarked that passage of this legislation would ensure
"historical experience will be provided for all future boards, thus
assuring that which was intended by the enabling legislation, which
provided for staggered terms for trustees."
Co-Chair Donley asked if Mr. Kelsey knew why the governor vetoed
the earlier legislation.
Mr. Kelsey replied that he had no way of telling.
Co-Chair Donley reiterated it would be helpful to have the
governor's veto message related to the earlier legislation and a
written statement regarding the current legislation.
Senator Ward noted Mr. Storer said he would provide this
information.
Co-Chair Donley suggested holding this bill until this information
was received.
Senator Wilken agreed this information was important but suggested
moving the bill at this time and reviewing the information before
the bill comes before the full Senate.
Co-Chair Donley stated he wanted to hold the bill until the next
day.
Senator Wilken noted he just received the governor's veto message.
Co-Chair Donley ordered the bill HELD in Committee.
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