Legislature(2009 - 2010)HOUSE FINANCE 519
04/11/2010 12:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB296 | |
| HB416 | |
| HB421 | |
| SB199 | |
| HB424 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 296 | TELECONFERENCED | |
| + | HB 416 | TELECONFERENCED | |
| *+ | HB 421 | TELECONFERENCED | |
| += | HB 424 | TELECONFERENCED | |
| + | SB 199 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 416
"An Act adopting and relating to the Uniform Prudent
Management of Institutional Funds Act; relating to the
investment of money for charitable purposes by
institutions, including governmental institutions; and
relating to the University of Alaska."
1:41:25 PM
KONRAD JACKSON, STAFF, REPRESENTATIVE KURT OLSON, SPONSOR,
stated that HB 416 would allow the State of Alaska to adopt
the Uniform Prudent Management of Institutional Funds Act
(UPMIFA). He briefly summarized the history and events that
led to the legislation. The State adopted the Uniform
Management of Institutional Funds Act (UMIFA) in 1972. In
2006, UMIFA was revised and up-dated to UPMIFA and has been
adopted by all but six states and Puerto Rico. UPMIFA
brings two changes to institutional funds management and
endowment accounting: first, is the elimination of the
historic dollar value as a benchmark for endowment spending
and the amount identified for accounting purposes as
permanently restricted net assets; secondly, clarification
of the legal classification of earnings. He continued that
UPMIFA incorporates the experience gained in thirty five
years under UMIFA and adoption will bring the state current
with updated fiduciary practices. He stressed that UPMIFA
is default legislation; other provisions in law in donor
agreements or governing instruments supersede UPMIFA.
Co-Chair Hawker asked what state savings accounts or
activities would be affected by the legislation.
Mr. Jackson surmised that none would be affected. He
thought that the state had governing provisions for all of
their funds. He emphasized that governing instruments
supersedes uniform prudent management language.
Co-Chair Hawker asked who would be affected within the
state structure.
1:46:34 PM
Mr. Jackson noted that endowments within the University of
Alaska are among funds that would be affected.
Co-Chair Hawker opened public testimony.
JIM LYNCH, TREASURER, UNIVERSITY OF ALASKA FOUNDATION (via
teleconference), stated he has been managing the
University's endowments for approximately twenty five
years. He reiterated that the legislation sets out
responsible practices and standards for investment and
management and provides essential guidance for the
administration of endowments and charitable funds. He
indicated that it reduces the exposure of fund
administrators to legal challenges. The state does not
offer guidance or standards to deal with institutional
funds. He summarized that UPMIFA delineated current
practices that are used nationally.
Mr. Lynch added that there were two UPMIFA provisions that
were specifically applicable to the university: management
of endowments, and the clarification that state fiduciary
rules apply to the university.
1:51:36 PM
Mr. Lynch noted support for UPMIFA from non-profits such as
the Rasmussen Foundation. Mr. Lynch remarked that various
state funds are all heavily regulated by the state and
would not be affected by the legislation. He noted UPMIFA
mostly applies to non-profits, and municipalities.
Co-Chair Hawker surmised that UPMIFA would have a greater
impact on the non-profit public sector. He wondered if the
legislation would impose new duties or additional burdens
to small organizations in the private sector. Mr. Lynch
felt that it would assist non-profits by clarifying their
fiduciary responsibilities. The guidelines help non-profits
manage the funds in accordance with the donor's intent.
1:55:42 PM
ERIC WOHLFORTH, CHAIR, UNIVERSITY OF ALASKA FOUNDATION
INVESTMENT COMMITTEE (via teleconference), contended that
the legislation was important and would be consistent with
most other states. He noted that many donors are out of
state and use to their own state's endowment administration
rules. Additionally, many small university endowments are
governed by old-fashioned rules that do not permit payment
of scholarships. Those funds would become available for the
payment of scholarships with adoption of the legislation.
Finally, he was assured by the fact that the bill was
default legislation.
Representative Fairclough asked if UPMIFA addressed
situations where the organization would like to change the
purpose of the endowment. Mr. Lynch related that the rules
require that the institution would have to ask a court for
permission to change the purpose of an endowment. However,
an expedited procedure exists for an endowment that is
under fifteen thousand dollars and over twenty years old.
The non-profit organization must notify the attorney
general's office as to the intent to change or to modify
restrictions on the endowment.
2:03:11 PM
Co-Chair Hawker closed public testimony
Co-Chair Stoltze MOVED to report HB 416 out of Committee
with individual recommendations and the accompanying fiscal
notes. There being NO OBJECTION, it was so ordered.
HB 416 was REPORTED out of Committee with a "do pass"
recommendation and with attached previously published
fiscal notes: FN 1(LAW), FN 2(UA).