Legislature(2009 - 2010)HOUSE FINANCE 519

04/11/2010 12:30 PM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 6:30 pm Today --
+ HB 296 ENERGY EFFICIENCY BONDS; LOANS; FUND TELECONFERENCED
Moved CSHB 296(ENE) Out of Committee
+ HB 416 PRUDENT MANAGEMENT OF INSTITUTIONAL FUNDS TELECONFERENCED
Moved Out of Committee
*+ HB 421 PUBLIC EMPLOYEE SALARIES TELECONFERENCED
Heard & Held
+= HB 424 G.O. BONDS FOR EDUCATION PROJECTS TELECONFERENCED
Moved CSHB 424(FIN) Out of Committee
+ SB 199 MEDICAID COVERAGE FOR DENTURES TELECONFERENCED
Moved Out of Committee
+ Bills Previously Heard/Scheduled 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).                                                                                              
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
Energy Savings Performance Contracting Summary-DOT.pdf HFIN 4/11/2010 12:30:00 PM
HB 296
HB 296 AHFC SEP BondsL Sec Analysis.pdf HFIN 4/11/2010 12:30:00 PM
HB 296
HB 296 SEP bonds Sponsor Statement[1].pdf HFIN 4/11/2010 12:30:00 PM
HB 296
HB416 Sectional Analysis ver R.pdf HFIN 4/11/2010 12:30:00 PM
HB 416
HB416 Sponsor Statement ver R.pdf HFIN 4/11/2010 12:30:00 PM
HB 416
HB416 Supporting Documents History UMIFA and UPMIFA.pdf HFIN 4/11/2010 12:30:00 PM
HB 416
HB416 Supporting Documents UPMIFA_map.pdf HFIN 4/11/2010 12:30:00 PM
HB 416
HB416 Supporting Documents-Letter AG 3-18-10.pdf HFIN 4/11/2010 12:30:00 PM
HB 416
HB416 Supporting Documents-Letter AG 3-18-10.pdf HFIN 4/11/2010 12:30:00 PM
HB 416
HB416 Supporting Documents-Letter Foreaker Group.pdf HFIN 4/11/2010 12:30:00 PM
HB 416
HB416 Supporting Documents-Why Adopt UPMIFA.pdf HFIN 4/11/2010 12:30:00 PM
HB 416
10 HB 421 FN - pay raise 2010.pdf HFIN 4/11/2010 12:30:00 PM
HB 421
HB421-LEG-LEG-3-30-10NEW.pdf HFIN 4/11/2010 12:30:00 PM
HB 421
HB 421 Gov Transmittal Letter.pdf HFIN 4/11/2010 12:30:00 PM
HB 421
hearing_req_HB421_040710.pdf HFIN 4/11/2010 12:30:00 PM
HB 421
SUmmary by Dept hb 421 SB 310.pdf HFIN 4/11/2010 12:30:00 PM
HB 421
SB 310
H FIN letters of support.pdf HFIN 4/11/2010 12:30:00 PM
SB199-DHSS-MAA-2-9-10.pdf HFIN 4/11/2010 12:30:00 PM
SB 199
SFIN backup information.pdf HFIN 4/11/2010 12:30:00 PM
SB 199
sponsor statement.pdf HFIN 4/11/2010 12:30:00 PM
SB 199
HB421-Ex Branch-4-8-10.pdf HFIN 4/11/2010 12:30:00 PM
HB 421
CSHB424(FIN)-DOR-TRS-4-10-10 GO Bonds for Education.pdf HFIN 4/11/2010 12:30:00 PM
HB 424
HB 424 Sample Ballot.pdf HFIN 4/11/2010 12:30:00 PM
HB 424
CS WORKDRAFT HB424 (FIN) P VERSION and Sectional.pdf HFIN 4/11/2010 12:30:00 PM
HB 424