Legislature(2003 - 2004)

05/08/2004 12:04 PM House RLS

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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.                                                                               

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