Legislature(2003 - 2004)
05/08/2004 12:04 PM House RLS
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 379-PERM FUND BOARD PUBLIC MEMBER REMOVAL CHAIR ROKEBERG announced that the first order of business would be CS FOR SENATE BILL NO. 379(FIN), "An Act providing that public members of the Board of Trustees of the Alaska Permanent Fund Corporation may be removed only for cause; and providing for an effective date." Number 0050 ROBERT STORER, Executive Director, Alaska Permanent Fund Corporation (APFC), Department of Revenue, informed the committee that the companion legislation, HB 544, passed out of the House State Affairs Standing Committee. Mr. Storer explained that this legislation would insert language specifying that public members of the APFC can only be removed for cause. There have been a couple of instances in which a new governor has replaced five out of the six trustees. Although the permanent fund wasn't disadvantaged by the aforementioned, the permanent fund is a very mature and sophisticated fund. In fact, a year or two of study can be necessary to evaluate investment vehicles. Therefore, continuity on the APFC is very important for the successful management of the permanent fund. Mr. Storer reminded the committee that the APFC consists of six board members, four of which are appointed. The board members have staggered terms. Mr. Storer related, "I have personally found that if new board members are able to leverage off the experience of existing board members they get up to speed far more quickly and allows them to make a more informed decision." REPRESENTATIVE McGUIRE inquired as to why the language in the original SB 379 removed. Number 0272 MICHAEL BARNHILL, Assistant Attorney General, Commercial/Fair Business Section, Civil Division (Juneau), Department of Law, explained that the thought during the hearing [of HB 544] in the House State Affairs Standing Committee was to keep it simple. Therefore, the language "for cause" was used because it's a standard term for the termination of public employees and the courts understand that language. In further response to Representative McGuire, Mr. Barnhill explained that under CSSB 379(FIN) if the trustee didn't "like what happened" [believe his or her being fired was appropriately justified], then the trustee would have to sue the state. He indicated that the committee packet should contain a list of about a dozen or so statutes that include a for cause removal standard. Therefore, there isn't anything unusual about it, he said. MR. STORER interjected that with the exception of the term "only", the language is the exact same as that used for the Alaska State Pension Investment Board. Number 0460 CHAIR ROKEBERG related his understanding that members of the APFC are members of the governor's cabinet. MR. STORER clarified that two of the APFC board members are members of the governor's cabinet, one of which is the commissioner of the Department of Revenue and the other is a member of the governor's cabinet. Currently, the other member is the attorney general. The four public members serve four- year staggered terms, and therefore every June 30th one term expires. Theoretically there would be up to two new board members, cabinet members, immediately and there would be a potential change on June 30th. In further response to Chair Rokeberg, Mr. Storer confirmed that this policy change is consistent with the trend in national corporate governance in terms of staggered terms and continuity. In fact, much of the same [change] is occurring with mutual fund boards. CHAIR ROKEBERG, upon determining there were no further questions or individuals wishing to testify, closed public testimony. Number 0587 REPRESENTATIVE COGHILL moved to report CSSB 379(FIN) out of committee with individual recommendations and the accompanying zero fiscal note. There being no objection, CSSB 379(FIN) was reported from the House Rules Standing Committee.