05/09/2004 04:28 PM House RLS

SB 326-PERMANENT FUND INVESTMENTS                                                                                             
                                                                                                                                
CHAIR ROKEBERG  announced that the  only order of  business would                                                               
be  CS  FOR  SENATE  BILL  NO.  326(STA),  "An  Act  relating  to                                                               
investments of  Alaska permanent  fund assets; and  providing for                                                               
an effective date."                                                                                                             
                                                                                                                                
Number 0059                                                                                                                     
                                                                                                                                
ROBERT   STORER,  Executive   Director,  Alaska   Permanent  Fund                                                               
Corporation  (APFC), Department  of Revenue,  explained that  the                                                               
APFC  must  follow the  prudent  investor  rule  as well  as  the                                                               
statutory list  specifying investments  APFC is allowed  to make.                                                               
Approximately four  years ago, the legislature  assisted the APFC                                                               
in allowing  it to invest 5  percent of its total  assets outside                                                               
of the statutory list while  following the prudent investor rule.                                                               
Mr. Storer referred to it as the basket clause.                                                                                 
                                                                                                                                
MR.  STORER  further explained  that  on  page  1, line  14,  the                                                               
legislation cleans up  some of the original intent  language.  On                                                               
page 2, line  3, the Senate increased the  original percentage to                                                               
10 percent,  which will  provide greater  investment flexibility.                                                               
However, it  doesn't mean  that the permanent  fund would  take a                                                               
lot  more risk.   He  explained that  it means  that when  APFC's                                                               
investments  appreciate,   APFC  won't  be  forced   to  sell  or                                                               
liquidate those investments because of statutory constraints.                                                                   
                                                                                                                                
Number 0163                                                                                                                     
                                                                                                                                
REPRESENTATIVE  BERKOWITZ  inquired  as   to  how  CSSB  326(STA)                                                               
differs  from  the  House   State  Affairs  Standing  Committee's                                                               
version.                                                                                                                        
                                                                                                                                
MR. STORER  specified that the  Senate asked if APFC  would amend                                                               
its original request  of 15 percent down to 10  percent, to which                                                               
he  agreed.   He related  his belief  that the  10 percent  would                                                               
provide the minimum  that could be utilized over  the next couple                                                               
of years.   However, he noted that APFC would  be back before the                                                               
legislature [on  this matter] in a  couple of years.   In further                                                               
response to  Representative Berkowitz, Mr. Storer  confirmed that                                                               
CSSB  326(STA)  is what  is  necessary  to move  the  legislation                                                               
through the process is these last days of the session.                                                                          
                                                                                                                                
Number 0224                                                                                                                     
                                                                                                                                
REPRESENTATIVE  BERKOWITZ moved  to report  CSSB 326(STA)  out of                                                               
committee [with  individual recommendations and  the accompanying                                                               
fiscal  notes].   There  being no  objection,  CSSB 326(STA)  was                                                               
reported from the House Rules Standing Committee.