Legislature(1999 - 2000)
03/04/1999 03:02 PM House HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HJR 13 - UNIVERSITY ENDOWMENT FOR RESEARCH Number 0050 CO-CHAIRMAN COGHILL announced the first order of business as House Joint Resolution No. 13, Relating to using oil spill settlement funds to create an endowment for the sciences at the University of Alaska. Number 0068 WILDA RODMAN, Legislative Administrative Assistant for Representative Gene Therriault, Alaska State Legislature read the sponsor statement: House Joint Resolution 13, is related to using oil spill settlement funds to create a long-term research and monitoring endowment. It supports the recent action of the Exxon Valdez Oil Spill Trustees to create a long-term research and monitoring endowment using $115 million of the expected reserve. The Exxon Valdez Oil Spill (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, and have been lacking in the area of research. I believe this has left a critical gap in our understanding of this spill and how to respond in the future. Endowing scientific chairs at the University will help increase available baseline data, enhance the biological resources of the northern Gulf of Alaska, and significantly improve spill-related technology. For example, it is widely understood that many aspects of the Exxon Valdez oil spill response, such as high-pressure washing of beaches and rock washing, may have caused more long-term harm than benefit. We also need to know if types of marine ecosystems are extra sensitive to certain cleanup activities, and if so, how we should respond to a spill in those areas. An endowment of this nature will fulfill the intent of the Exxon Valdez oil settlement and the mission of the Trustee Council, which is to restore, rehabilitate, replace, enhance, or acquire equivalent resources and services in the oil spill region. MS. RODMAN noted they have a proposed committee substitute because of recent actions taken by the Trustee Council on Monday. Number 0242 REPRESENTATIVE BRICE moved to adopt the proposed committee substitute (CS) for HJR 13, 1-LS0314\H, Ford, 3/4/99, as a work draft. There being no objection, Version H was before the committee. CO-CHAIRMAN COGHILL accepted the motion. Number 0385 MS. RODMAN referred to the memo attached to the CS in the packets that explains all the changes. The original [bill] urged the Trustees to create an endowment through the University of Alaska. On Monday the EVOS Trustees voted to use $115 million of the reserve for a research and monitoring program which is similar enough to what the sponsors wanted that they changed the resolution to now support that action. It would no longer be through the University of Alaska. In addition to that, they encouraged the Trustee Council to use a portion of that $115 million to establish endowed chairs at the University. MS. RODMAN went on to say there is an issue with the way that the funds are invested. Currently the Department of Justice requires that the funds be deposited into a court registry, which can only be invested in the U.S. Treasury. The Trustee Council, as part of this resolution, wants to ask the U. S. Congressional delegation to amend federal legislation so that they can move it out of the Court Registry Investment System and into a different kind of fund where it could be invested more aggressively. CO-CHAIRMAN COGHILL asked who would have control of this. MS. RODMAN said Molly McCammon can answer that better. Currently the monies are in a non-expendable fund. When they are authorized for expenditure, they are moved into either a federal fund or an Alaska fund. The Alaska fund is called the Exxon Valdez Oil Settlement Trust and is expendable. The EVOS Trustee Council wants to set up a non-expendable fund that is similar to that and would be invested like the retirement system funds. Number 0583 MOLLY MCCAMMON, Executive Director, Exxon Valdez Oil Spill Trustee Council, testified via teleconference from Anchorage. She confirmed what Ms. Rodman said. Under federal law these funds have to be left within the U.S. Treasury so they can only be affected in treasury bills. The Trustees believe this seriously limits their potential in creating a long-term research endowment and research fund. In order to maximize their investment potential, the EVOS Trustees are seeking congressional authorization to move the funds from the treasury to invest them in other accounts that are controlled by prudent management. Number 0679 REPRESENTATIVE KEMPLEN asked if there was any discussion at the Trustee Council meeting of the concept of using these funds to endow chairs at the University of Alaska. MS. MCCAMMON answered they did not specifically bring up the issue of endowed chairs at the Monday meeting. The action was strictly to establish a long-term fund for research, but there has been support expressed for endowed chairs. Most of the public comment has been in favor of a competitive research program. The plan is to develop the long-term plan and then see if an endowed chair fits into those goals. At this point there hasn't been any action taken on it. REPRESENTATIVE KEMPLEN asked if there was a percentage breakdown between the categories of research, monitoring and general restoration. Number 0812 MS. MCCAMMON answered no that they all fit together. These are the main categories established through the settlement itself in 1991. There would be two on-going programs. One would be the long-term planning of what goes on with ocean currents, ocean temperatures and the things seen over a decade, and the other would be research to answer a multitude of questions about the marine environment. Number 0893 MS. RODMAN gave the committee information from the University on exactly how the endowed chairs work. Usually a minimum of $2 million is managed and invested by the University of Alaska Foundation and would be deposited into the pooled endowment fund. The interest is expected to raise approximately $100,000 per year which would pay the salary and some support for the endowed position. The subject for the research area would be dictated by EVOS but the University would have discretion on who it hires to fill the position. EVOS could be as specific as it wanted on the area of research. CO-CHAIRMAN COGHILL asked when would they want the transfer to happen. Number 0975 MS. MCCAMMON said they would like the authority as soon as possible to get the funds in a better investment climate. They hope to have more than $115 million dollars in 2002 for the research fund. In the two years since the process started, the Trustees believe a minimum of $17 million in unearned interest has been lost. As soon as this is accomplished, they will have more options in the future. REPRESENTATIVE KEMPLEN asked if the University could hire someone for the $100,000 that is generated per year. MS. RODMAN said Ann Ringstad at the University said the $100,000 covers salary, benefits and some support. MS. MCCAMMON added that some of the top researchers already receive over $120,000 in salary and benefits; but to attract top faculty, they would want to have more than $100,000 per year. Number 1078 REPRESENTATIVE KEMPLEN asked if the resolution addresses a minimum level for an endowment to attract a quality person. MS. RODMAN answered no that it simply urges the establishment of endowed chairs. She emphasized that it is a minimum of $2 million to generate the $100,000. Number 1158 REPRESENTATIVE BRICE moved House CS for HJR 13 with individual recommendations and zero fiscal note.
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