Legislature(2005 - 2006)CAPITOL 106
03/29/2005 08:00 AM House STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB201 | |
| HB183 | |
| HB170 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 201 | TELECONFERENCED | |
| *+ | HB 183 | TELECONFERENCED | |
| += | HB 170 | TELECONFERENCED | |
| += | HB 177 | TELECONFERENCED | |
| += | HB 191 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
March 29, 2005
8:05 a.m.
MEMBERS PRESENT
Representative Paul Seaton, Chair
Representative Carl Gatto, Vice Chair
Representative Jim Elkins
Representative Jay Ramras
Representative Berta Gardner
MEMBERS ABSENT
Representative Bob Lynn
Representative Max Gruenberg
COMMITTEE CALENDAR
HOUSE BILL NO. 201
"An Act relating to an application for a permanent fund dividend
for a member of the armed forces of the United States serving on
active duty outside of the state; and providing for an effective
date."
- HEARD AND HELD
HOUSE BILL NO. 183
"An Act relating to the use of campaign contributions for shared
campaign activity expenses and to reimbursement of those
expenses."
- MOVED CSHB 183(STA) OUT OF COMMITTEE
HOUSE BILL NO. 170
"An Act relating to the qualifications of public members of the
Public Employees' Retirement Board and the Alaska Teachers'
Retirement Board."
- HEARD AND HELD
HOUSE BILL NO. 177
"An Act relating to employee and employer contributions to the
teachers' retirement system and the public employees' retirement
system; and providing for an effective date."
- SCHEDULED BUT NOT HEARD
HOUSE BILL NO. 191
"An Act relating to defined contribution systems for members of
the teachers' retirement system and the public employees'
retirement system; and providing for an effective date."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 201
SHORT TITLE: PERM. FUND DIVIDEND APPS OF MILITARY
SPONSOR(S): REPRESENTATIVE(S) CHENAULT
03/04/05 (H) READ THE FIRST TIME - REFERRALS
03/04/05 (H) MLV, STA
03/17/05 (H) MLV AT 1:00 PM CAPITOL 124
03/17/05 (H) Moved Out of Committee
03/17/05 (H) MINUTE(MLV)
03/18/05 (H) MLV RPT 6DP
03/18/05 (H) DP: THOMAS, GRUENBERG, CISSNA, ELKINS,
MCGUIRE, LYNN
03/29/05 (H) STA AT 8:00 AM CAPITOL 106
BILL: HB 183
SHORT TITLE: CAMPAIGN FINANCE: SHARED EXPENSES
SPONSOR(S): REPRESENTATIVE(S) HAWKER
02/28/05 (H) READ THE FIRST TIME - REFERRALS
02/28/05 (H) STA, JUD
03/29/05 (H) STA AT 8:00 AM CAPITOL 106
BILL: HB 170
SHORT TITLE: PUB EMPLOYEES/TEACHERS RETIREMENT BOARDS
SPONSOR(S): REPRESENTATIVE(S) KELLY
02/23/05 (H) READ THE FIRST TIME - REFERRALS
02/23/05 (H) STA, FIN
03/22/05 (H) STA AT 8:00 AM CAPITOL 106
03/22/05 (H) Heard & Held
03/22/05 (H) MINUTE(STA)
03/29/05 (H) STA AT 8:00 AM CAPITOL 106
WITNESS REGISTER
SHARALYN WRIGHT, Staff
to Representative Mike Chenault
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HB 201 on behalf of
Representative Chenault, sponsor.
SHARON BARTON, Director
Permanent Fund Dividend Division
Alaska Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding the PFD and HB
201.
CHRIS POAG
Civil Division
Alaska Department of Law
POSITION STATEMENT: Answered questions regarding the legalities
of HB 201.
REPRESENTATIVE MIKE HAWKER
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 183 as sponsor.
BROOKE MILES, Executive Director
Alaska Public Offices Commission (APOC)
Anchorage, Alaska
POSITION STATEMENT: Answered questions on behalf of APOC during
the hearing on HB 183.
HEATH HILYARD, Staff
to Representative Mike Kelly
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Reviewed the previous discussion of HB 170
from prior hearings on behalf of Representative Kelly, sponsor.
PAT WELLINGTON, Elected member
Public Employees' Retirement (PERS) Board
Anchorage, Alaska
POSITION STATEMENT: Testified and answered questions on behalf
of the PERS Board during the hearing on HB 170.
JAY DULANY
Eagle River, Alaska
POSITION STATEMENT: Testified on behalf of himself during the
hearing on HB 170.
KEVIN RITCHIE
Alaska Municipal League (AML)
Juneau, Alaska
POSITION STATEMENT: Testified and answered questions on behalf
of AML during the hearing on HB 170.
SAM TRIVETTE, President
Retired Public Employees of Alaska (RPEA)
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of RPEA during the
hearing on HB 170.
ACTION NARRATIVE
CHAIR PAUL SEATON called the House State Affairs Standing
Committee meeting to order at 8:05:00 AM. Representatives
Elkins, Gatto, Gardner, and Seaton were present at the call to
order. Representative Ramras arrived as the meeting was in
progress.
8:06:31 AM
CHAIR SEATON discussed the meeting on Thursday, March 24. He
clarified that the committee members made side-by-side
comparisons of other bills towards producing the House State
Affairs Standing Committee's forthcoming PERS/TRS bill.
HB 201-PERM. FUND DIVIDEND APPS OF MILITARY
8:07:28 AM
CHAIR SEATON announced that the first order of business was
HOUSE BILL NO. 201, "An Act relating to an application for a
permanent fund dividend for a member of the armed forces of the
United States serving on active duty outside of the state; and
providing for an effective date."
8:07:29 AM
SHARALYN WRIGHT, Staff to Representative Mike Chenault, Alaska
State Legislature, introduced HB 201 on behalf of Representative
Chenault, sponsor. She explained that the purpose of the bill
is to permit a person who has a power of attorney for an active
military duty person who's stationed outside of the State of
Alaska to sign and file an Alaska Permanent Fund Dividend (PFD)
application for the said individual. She presented an example
of an Alaskan man stationed in Japan who was then deployed to
Afghanistan, and the PFD Division could not contact him; he
didn't know that there was a problem with his PFD application
until he returned to Alaska.
MS. WRIGHT continued:
So if someone back home had a power of attorney, that
power of attorney allows you to make absolutely life-
changing decisions: you can sign for a bank account,
you can sign for real estate, you can make all kinds
of decisions. And in the whole scope of things, the
[PFD] shouldn't fit at the top or the bottom of that
list; it should fit somewhere in the middle. And we
should allow someone ... who's a trusted person in the
military person's life, ... to sign that [PFD]
application so that [the PFD check] comes in a timely
manner.
8:09:35 AM
REPRESENTATIVE GARDNER remarked that there is the potential for
problems if one or more persons applies on behalf of the person
who's on active duty. She asked what would happen if the
service person never got the money because someone else signed
for the PFD check and took it.
MS. WRIGHT replied, "I would not imagine a responsible
individual having more than one power of attorney, ... because
when you have a power of attorney and you decide to change that,
you also are required to revoke any previous powers of
attorney."
8:11:06 AM
CHAIR SEATON commented that the bill would only allow the
individual with the power of attorney to apply for the PFD. He
asked who would be held responsible for fraud if a person
applied for a PFD on behalf of another person who is not
eligible to receive the PFD.
MS. WRIGHT responded that she believed that this issue would
dealt with by the PFD Division.
8:13:23 AM
SHARON BARTON, Director, Permanent Fund Dividend Division,
Alaska Department of Revenue, explained that when filling out
the PFD application, the power of attorney is attesting to all
of the information on the application being true so far as that
person knows it to be true.
CHAIR SEATON asked if the PFD Division sees any problems with HB
201.
MS. BARTON replied that logistically the division has no problem
with the bill, as it won't put a large new workload on the
personnel. She noted that the division is concerned about
possible fraud situations. In addition, she pointed out:
We are also concerned about it being offered broadly
to all military. Our military members across the
world are filing very successfully this ...
application period for their dividends. We know that
those folks in Iraq or Afghanistan, places like that,
don't have the ready access to mail and to the
Internet, although they do, almost all of them, have
access eventually. ... We have a lot of support built
into our processing system now to allow plenty of
time, all the time they need, to get their
applications in when they return to a place in the
world they can file or can supply that additional
information they need. But if the committee is
interested in making this available to military
members, we would ask that you consider at any rate
restricting it to those who are receiving hostile fire
or imminent danger pay....
8:16:59 AM
CHAIR SEATON asked if Ms. Barton had any suggested language for
that.
MS. BARTON responded that she did not have it with her but would
be available to work on the language for an amendment.
8:17:39 AM
REPRESENTATIVE GARDNER asked Ms. Barton if she was implying that
she didn't see the need for this bill.
MS. BARTON answered that division personnel have heard some
complaints from people who have been frustrated with the current
system, mostly from family members of the military servicemen.
She noted that she personally only knew of one particular such
case. She said, "Staff tell me when I poll them that they've
been able to work through every situation with the calls and
letters and emails that they've received about the military. ...
It mostly has to do with the delay in receiving the PFD check
when they get back to the States. ... But in no case are we
denying anyone."
REPRESENTATIVE RAMRAS commented that he felt HB 201 would make
it easier for military personnel that are in harm's way to apply
for the PFD.
8:20:08 AM
CHRIS POAG, Civil Division, Alaska Department of Law, explained:
A typical power of attorney has two parties: one's
the principal - that's the person who's represented,
the military person who goes overseas; and the other's
the agent, or attorney-in-fact - that's the person
who's going to do any benefit applications on behalf
of the principal. In that scenario, ... the agent's
responsible in a [PFD] application to make
representations about whether or not the principal is
in fact eligible. ... We have to assume that they'll
get that information directly from the principal
instead of from some sort of second-hand source. But
when they make that information available in the
application and they turn that application in, it more
becomes a question probably in a prosecution sense of
who made the representation.
MR. POAG explained that either the principal provided the agent
with false information, or the agent made a mistake on the
application. Fraud refers to false information that is
purposefully provided, he noted, not unknowingly provided.
Under HB 201, he said:
This is just going to be very hard, if not impossible
to prosecute because you're going to have people
pointing the finger at each other saying, 'Well, they
told me this,' and 'They told me that.' And it's
going to be real hard to prove beyond a reasonable
doubt that anybody knowingly made false
representations in that [PFD]. So I think pretty much
we'll be giving up any prosecutions in these cases.
It would be very difficult to do otherwise.
8:22:07 AM
MR. POAG continued:
As you know, when you file for your [PFD] application,
you have to make a representation that the information
is correct, and that you intend to remain in Alaska
indefinitely, or, if you're Outside, that you intend
to return and remain indefinitely. Obviously an agent
on behalf of a principal can't make intentional
statements for them. So we also gave up that portion
of our application requirement.
8:23:54 AM
REPRESENTATIVE GATTO stated that a crooked person could file as
power of attorney for someone and have the PFD check placed into
his or her own account. He asked what the PFD Division could do
about this.
MR. POAG replied:
It depends a lot on the form of the power of attorney
that's been drafted. And it depends probably a little
bit on the way this legislation's drafted as well. A
typical power of attorney that has normal powers, not
specific powers, ... would be entitled to [have] that
check ... put into the account that they designated;
they are [the] agent, they make decisions as to where
the money goes and how it's spent and all of those
sorts of decisions. So that crooked person could end
up with [the principal's] PFD in their [own] account.
REPRESENTATIVE GATTO asked who becomes the liable person in this
case.
MR. POAG replied that it would depend on who made the
misrepresentation. He commented that the state will have a
difficult time determining which one was lying if they are
blaming one another.
8:25:54 AM
MR. POAG, in response to Representative Gatto, stated that a
person cannot fill out a PFD application for his/her spouse.
REPRESENTATIVE GATTO commented that the bill would then be
saying that the power of attorney trumps marriage.
MR. POAG responded:
I think this is probably why ... allowing power of
attorneys has been a sort of a guarded exception.
It's been for, essentially, a parent on behalf of a
child [to make] ... representations as to whether or
not their child intends to return or remain in Alaska
and stay there indefinitely. And this [bill] is a
situation where we're broadening the scope of that
exception.
MR. POAG pointed out that current law allows for a military
person to late file after he/she has returned from the hot zone.
8:28:05 AM
REPRESENTATIVE RAMRAS stated that Fort Wainwright and Fort
Richardson will both be having large deployments this year, and
he saw that the deployment newsletters address issues like how
to give one's spouse the power of attorney. He asked for
confirmation that the bill would make the power of attorney
applicable specifically to the PFD because it comes under the
purview of the State of Alaska.
MR. POAG replied that current PFD law says that only the
individual can apply for his or her own PFD, and the only
exceptions for that are for a child or for somebody who is
incapacitated. He stated that HB 201 would create a third
exception for military persons. He noted, "The bill as drafted
doesn't have any 'hot zone' language. As drafted it would be
anybody in the military outside of the United States."
8:29:25 AM
REPRESENTATIVE RAMRAS commented that this was a particularly
timely bill because of the large deployments scheduled for this
year.
REPRESENTATIVE GARDNER asked if there is any reason that those
individuals being deployed this fall couldn't apply for the PFD
before they leave.
MR. POAG replied that they can apply between January 1 and March
31.
8:30:36 AM
REPRESENTATIVE GARDNER asked if a military person doesn't come
back, for any reason, if the spouse or power of attorney can
continue to apply for the PFD on behalf of that person year
after year.
MR. POAG replied that if the principal abandoned his/her intent
to return to Alaska, then the agent or spouse should not be
filing on the principal's behalf. He stated that if the agent
was representing in the application that the principal was
outside of Alaska, at some point the principal would no longer
qualify for an Outside allowable absence exception. He said
that if the language of this bill were to be drafted such that
the agent can only file while the principal is in the hot zone
outside of the United States, then that would at some point
expire, and the agent would probably be caught. He noted, "It
would depend on the drafting of this bill."
8:32:12 AM
MR. POAG, in response to Chair Seaton, reiterated that as the
bill is currently drafted, it allows anyone on active duty
outside of the United States to apply through a power of
attorney, even if the individual is not in a hot zone and is
gone for a long time. He said that if the bill were limited to
hot zones, it would be easier for the PFD Division to
investigate possible frauds.
8:33:14 AM
REPRESENTATIVE GATTO asked if there is any place in the world
that does not qualify as a hot zone.
MR. POAG replied that as he understood it, being in a hot zone
would require a person to qualify for a certain type of military
pay status.
REPRESENTATIVE GATTO asked if the term "hot zone" is actually
defined.
MR. POAG replied yes; it's an official pay status that one
receives in the military.
CHAIR SEATON closed public testimony.
8:34:32 AM
CHAIR SEATON asked Ms. Wright to address the issue of the
inability to enforce an intent to return provision if the PFD
application is completed through a power of attorney.
MS. WRIGHT presented an example of an individual who defrauded
the PFD Division and was reported, but the division never
pursued the case. She said, "I guess in life we have to realize
that if somebody is out to circumvent the system, they're going
to circumvent it no matter what rule we come up with, no matter
what changes we make." She reiterated that the purpose of the
bill is to allow the military personnel to have an easier way to
apply for the PFD. She noted that hot zone pay can change
quickly. She said, "I strongly believe this 'hot zone' language
should not be in [the bill]." Representative Chenault's office
devotes a lot of time to military-PFD problems, she stated.
8:38:51 AM
REPRESENTATIVE ELKINS asked why the power of attorney couldn't
specify that it was only good for applying for the dividend.
MS. WRIGHT answered that there is an area on the power of
attorney [application] that would allow a person to write in
that the agent has permission to file for a PFD.
8:40:46 AM
REPRESENTATIVE RAMRAS reiterated that soldiers from Alaska will
be deployed overseas this year and the military has recommended
that the soldiers set up a power of attorney. He emphasized
that the bill should be passed quickly.
MS. WRIGHT concurred with Representative Ramras and said the
bill is long overdue. She said, "We have afforded the [PFD]
Division every opportunity. At the beginning of session we
brought them in, told them what the problem was, gave them every
opportunity to repair it, and [they] chose not to."
8:42:30 AM
REPRESENTATIVE GARDNER said that she applauds the effort of the
bill, but she wonders if a better plan would be to make the
application available early for people who are leaving.
MS. BARTON replied that Representative Gardner's proposal could
perhaps be worked into the law. She noted that the problem is
that the eligibility period covers the full year prior to the
dividend, from January 1 to December 31. If someone filled out
the application in August, "it's unknown what might occur to
them between August and January as far as their eligibility for
the dividend." The law requires that the applicant attest to
the fact that during the prior eligibility year certain things
have been true, she said.
8:44:35 AM
CHAIR SEATON requested that for the next hearing, Ms. Barton
present data on the number of applications that have had
problems on this particular aspect of the PFD application "so we
have a good handle on the numbers and those that were denied, or
missed or filed late under the current existing law."
8:44:54 AM
MS. BARTON, in response to Representative Gatto, replied that
under the law, a person would be committing fraud if he/she
filled out a spouse's application with the spouse's e-signature.
[HB 201 was heard and held.]
HB 183-CAMPAIGN FINANCE: SHARED EXPENSES
8:45:53 AM
CHAIR SEATON announced that the next order of business was HOUSE
BILL NO. 183, "An Act relating to the use of campaign
contributions for shared campaign activity expenses and to
reimbursement of those expenses."
8:45:57 AM
REPRESENTATIVE MIKE HAWKER, Alaska State Legislature, as sponsor
of HB 183, said the bill is a common sense fix that affects
every person running for office in the state of Alaska. Under
current statute, he said, a vendor has to break a bill into
separate components and each candidate has to pay separately.
The proposed legislation would allow one candidate to pay the
bill, as long as the other candidates involved completely
reimburse their share of that expense within 48 hours. He said
the decision to make it 48 hours is reasonable. He indicated
that what usually happens is that one candidate writes the check
and the other candidates hand him/her a check almost
simultaneously for ease of record keeping. The bill would
clearly place the responsibility for campaign finance compliance
upon the candidates themselves.
8:48:34 AM
REPRESENTATIVE HAWKER said that Legislative Legal and Research
Services has recommended the format in which the bill is
written, specifically listing what candidates "may not do." He
offered further details. He noted that there is a zero fiscal
note in the committee packet.
8:49:08 AM
REPRESENTATIVE GARDNER agreed that the concept of the bill is
common sense. Notwithstanding that, she directed attention to
page 2, line 17, which would require that the candidate [or
group participating in the activity] "receives, within 48 hours
after payment of the expense, complete reimbursement of the
amount of campaign contributions used for payments made on
behalf of another candidate or group participating in the
activity." She said her concern is that if she were the
candidate responsible for receiving that money, she can't
control when the others reimburse her. She said she can only
control when she asks them for the money.
8:50:06 AM
REPRESENTATIVE HAWKER said Alaska has some of the strictest
campaign finance laws in the U.S. He stated his intent in
crafting the bill was to be careful not to create a loophole
that would be too wide, but rather to make a specific provision.
He explained, "We didn't want to have an open window that would
allow candidate A to make a payment that candidate B could get
around to paying sometime, someday, a month in the future." He
said it's a judgment call.
8:51:03 AM
REPRESENTATIVE GARDNER clarified that the bill should specify
that the debtor is in violation in law if he/she doesn't pay
within 48 hours.
REPRESENTATIVE HAWKER said that's worth considering.
8:51:39 AM
CHAIR SEATON said he can foresee that 48 hours might be [too
short] a period, depending on weekend timing and mail delivery
time.
8:51:56 AM
REPRESENTATIVE GATTO said he is looking for a way a person may
attempt to conceal a campaign contribution by paying the other
person substantially more than a fair share of the bill. He
said it would be much more difficult to track because the
payment is not made to the vendor and there is no paper trail.
He spoke of having 60 days to pay a vendor versus the 48 days to
pay a candidate. He asked, "This is an option rather than a
requirement, right?"
8:53:32 AM
REPRESENTATIVE HAWKER confirmed that "this just provides an
option." He said each expense needs to be documented by an
invoice, and each candidate is required to maintain the
documentary evidence of his/her expenditures. The way the
campaign law is structured, the prohibition is against making a
contribution to another candidate or group. He added, "We had
to structure this exemption within the framework of an overall
law that prohibits making contributions." Regarding getting the
reimbursement in a situation where there is a bill from a vendor
that can be unpaid for 60 days, the trigger, for example, would
be when the person pays on behalf of another candidate. In that
instance, he/she would then have 48 hours to be paid back. He
added, "We're not creating two different time cycles here."
8:54:46 AM
BROOKE MILES, Executive Director, Alaska Public Offices
Commission (APOC), noted that the commission reviewed the bill
at its last meeting and understands the practical reasons for
it, since the current law is so restrictive. She said APOC is
"fine with the bill," although it takes a neutral position on
it. She said the bill speaks to candidates and groups. She
pointed out that it is common for political candidates to join
together to share a campaign activity, but it is not common for
groups to do so. Because of that, she suggested only providing
the exemption for candidates.
8:57:16 AM
MS MILES, in response to a question from Chair Seaton, said the
repayment time for expenditures that a candidate makes on
his/her own behalf is "reasonably consistent business
practices." In other words, whatever the vendor allows. She
noted that most standard business practices don't go beyond 60
days.
8:57:38 AM
CHAIR SEATON, regarding "other timing," stated his understanding
that if a candidate makes personal expenditures, his/her
campaign has to repay that amount within 72 hours.
8:58:00 AM
MS. MILES answered that's correct. She added that if the
committee thinks it would be more reasonable to expand the 48
hours to a 72-hour period, she doesn't think that would cause
the commission concern either.
8:58:13 AM
REPRESENTATIVE GATTO asked how APOC would treat "in a timely
manner" rather than within 48 hours.
8:58:23 AM
MS. MILES replied that APOC wouldn't have a problem, but she
stated concern that there may be public perception that
candidates are "landing" money or giving money to another
candidate, which she said are practices that those interested in
campaign finance reform are trying to stop.
8:59:01 AM
CHAIR SEATON asked the sponsor if he has any objection to [Ms.
Miles' suggestion to only provide the exemption to candidates].
8:59:17 AM
REPRESENTATIVE HAWKER noted that a conjunction is used:
"candidate or group". He said, "So, we have not in any way
invaded the other provisions of statute which specifically make
those prohibitions against partnering between groups and
candidates."
CHAIR SEATON asked Representative Hawker if he could give some
examples of when there would be different groups that would "be
having this shared activity."
REPRESENTATIVE HAWKER speculated perhaps during joint fund
raising or a joint media expense.
9:01:15 AM
REPRESENTATIVE RAMRAS suggested that a situation in which there
was a majority House fundraiser including several individual
candidates would be the mixing of a group and individual,
because there would be the opportunity for specific campaign
donations to an individual candidate as well as for the House
majority.
9:01:39 AM
REPRESENTATIVE HAWKER stated his understanding that that sort of
an action would be prohibited under current statute. He said he
would defer to APOC for a more correct interpretation. He
reiterated his emphasis of the conjunctive "or".
9:02:13 AM
MS. MILES reiterated that two or more groups don't usually share
fundraising events very often. She indicated that she is fine
with the language, particularly after hearing the clarification
from the sponsor that there is no intent to permit
group/candidate combinations that would be problematic with the
other provisions of law.
9:03:29 AM
CHAIR SEATON, after ascertaining that there was no one else to
testify, closed public testimony.
9:03:47 AM
CHAIR SEATON encouraged a motion from someone to change "48
hours" to "72 hours", because there exists a 72-hour timeframe
for candidates to reimburse themselves and it seems [prudent] to
keep the times the same to avoid "inadvertent mix-ups of
timelines."
9:04:02 AM
REPRESENTATIVE GATTO moved Amendment 1, as follows:
On page 2, line 17:
Delete "within 48 hours"
Insert "within three working days"
9:04:24 AM
CHAIR SEATON objected for the purpose of discussion.
9:04:45 AM
MS. MILES, in response to a question from Chair Seaton,
confirmed that the amount of time [that a candidate has to
reimburse his/her campaign] is 72 hours. She said she does not
see a problem with using the phrase "within three working days".
9:05:06 AM
REPRESENTATIVE GATTO explained that "these things" often occur
on a Friday night, so this amendment would allow the individual
"some opportunity besides the weekend."
9:05:26 AM
REPRESENTATIVE HAWKER said as long as he has the tacit
concurrence from APOC that "within three working days" would not
be a problem, he would be happy to defer to the wisdom of the
committee.
9:05:49 AM
CHAIR SEATON removed his objection to Amendment 1. There being
no further objections, Amendment 1 was adopted. He added that
the amendment is conceptual.
9:06:44 AM
REPRESENTATIVE GARDNER moved Amendment 2, as follows:
On page 2, line 17:
Delete "receives"
Insert "submits"
On page 2, line 19:
Between "on behalf of" and "candidate"
Delete "another"
Insert "the"
REPRESENTATIVE GARDNER said that would put the onus on the
person that owes the money, not the one to whom it is owed.
9:07:49 AM
CHAIR SEATON objected for the purpose of discussion.
REPRESENTATIVE GATTO said hand delivery, postmark, and check
date would probably be covered under "submit".
REPRESENTATIVE GARDNER said, as a candidate, she doesn't want to
be responsible for when someone else repays her, only for when
she repays him or her.
9:08:08 AM
REPRESENTATIVE HAWKER stated opposition to Amendment 2. He said
it is important to be cautious when making changes within the
framework of existing statute to consider the entire framework
in which the language is being constructed.
The committee took an at-ease from 9:09:06 AM to 9:10:49 AM due
to technical difficulties.
9:10:51 AM
REPRESENTATIVE HAWKER restated for the record his opposition to
Amendment 2. He explained that when changes are made in
statute, a consideration has to be made that language is being
added within the overall construct of the larger campaign
finance statutes. He noted that the "largest prefacing comment"
is on page 1, line 5, [in Section 1, which amends] AS
15.13.112(b), and which read: "Campaign contributions held by a
candidate or group may not be". Following that is a list of
things that the candidate may not do with his/her contributions.
[Paragraph (7)] - the seventh prohibition in the list - shows
that [those campaign contributions] may not be "used to make
contributions to another candidate or to a group". He stated,
"This is the provision that has been interpreted to say that I
cannot make a payment on behalf of a group of candidates,
because I would be contributing value or benefit to that group."
Representative Hawker said the exemption that is necessary, in
order to be consistent with the structure of statute, is that
the person making that payment is the one who is in peril if
they make the payment in violation of statute. He continued:
So, we create an exemption that protects the payor
candidate from that peril, by saying that they are not
held in violation of [Paragraph] (7) here if they
receive back from the other candidate ... the ratable
reimbursement. And it's important here, because the
... candidate who is making the payment - placing
themselves in peril - that is a risk they are assuming
on themselves. And ... if they, in fact, do not have
... arrangements made with the other candidate to
receive that money back, ... they have made ... an
illegal contribution, in that they are the risk-taker
in this piece. ... I believe the onus should be on
the paying candidate, not trying to shift this into
the other candidate paying.
REPRESENTATIVE HAWKER offered a hypothetical example.
9:14:37 AM
CHAIR SEATON maintained his objection.
9:14:48 AM
REPRESENTATIVE GATTO responded as follows:
I guess where I'm going is: I didn't do it in 72
hours or three working days ..., and now I'm in
violation. So, I figure, "Well, I can get out of this
if I simply go directly to the vendor." But the other
guy's already paid the vendor. And now the vendor has
money from the other guy and me; now he has to make a
reimbursement to my ... rich friend. [Are] there any
violations? Have I successfully gotten out of trouble
by doing that?
9:15:19 AM
REPRESENTATIVE HAWKER responded that he is not in the position
to say how APOC would rule on a specific case. Notwithstanding
that, he surmised that in that case it would be legitimate to
interpret that the wealthy candidate in fact overpaid his/her
portion to the vendor and did not make a loan, because "it had
been paid by the 'poor' candidate, who paid directly." At that
point, it would be incumbent upon the rich candidate who had
overpaid the vendor to receive a reimbursement from the vendor.
He added, "I think the doctrine of common sense would apply in
the interpretation here."
9:16:00 AM
REPRESENTATIVE GATTO clarified that a person could delay his/her
reimbursement by three months because the vendor is satisfied.
He queried, "My rich friend is simply willing to leave himself
in that hole of me turning [up] three months later and paying
the vendor?" Representative Gatto commented, "No, I can't do
that."
9:16:27 AM
CHAIR SEATON clarified that "it has to be not only the amount,
but it has to be received, otherwise you as the ... rich
candidate are in violation." He said [Amendment 2] would shift
the burden to the poor candidate whether or not he/she submits
or not, instead of saying that the rich candidate "only can do
this if they're going to get reimbursed within the three working
days."
9:16:56 AM
REPRESENTATIVE GARDNER said that's the heart of what she is
trying to get at, and she reiterated her previous statements
about not being able to be in control of what someone else does.
9:17:13 AM
A roll call vote was taken. Representatives Gardner and Gatto
voted in favor of Amendment 2. Representatives Ramras, Elkins,
and Seaton voted against it. Therefore, Amendment 2 failed by a
vote of 2-3.
9:18:41 AM
REPRESENTATIVE ELKINS moved to report [HB 183, as amended] out
of committee with individual recommendations and the
accompanying fiscal notes. There being no objections, CSHB
183(STA) was reported out of the House State Affairs Standing
Committee.
HB 170-PUB EMPLOYEES/TEACHERS RETIREMENT BOARDS
9:19:39 AM
CHAIR SEATON announced that the next order of business was HOUSE
BILL NO. 170, "An Act relating to the qualifications of public
members of the Public Employees' Retirement Board and the Alaska
Teachers' Retirement Board."
9:19:58 AM
HEATH HILYARD, Staff to Representative Mike Kelly, Alaska State
Legislature, on behalf of Representative Kelly, sponsor,
reviewed the previous discussion of the bill from prior
hearings.
9:21:20 AM
PAT WELLINGTON, Elected member, Public Employees' Retirement
(PERS) Board since 1977, commended Representative Kelly for
realizing that "probably the solution to the problem is not
throwing out the two boards and starting all over again." In HB
170, the three public members would be appointed by the governor
and two would never have worked for "a participating political
subdivision." He stated that he is not certain of the purpose
of that. He said right now the governor has the authority to
appoint three members to the PERS Board. He listed the current
appointed members. He said Representative Kelly indicates in
the proposed bill that there "should be a need for some
expertise in administration, finance, accounting, or economic
development." He opined that it is necessary to consider the
responsibility of the PERS Board, and to realize that the board
is not in the asset management end of the program.
9:23:54 AM
MR. WELLINGTON estimated 80 percent of the board's work centers
around appeals "from the administrator." He explained, "If a
person is injured on a job and wants to apply for occupational
or nonoccupational disability, and the director turns them down,
the board hears those appeals with two doctors." The board also
hears administrative appeals regarding retirement benefits,
overpayments, or underpayments. The board meets once a year to
set the employers' contribution rate, which is brought to the
board by the administration, with the input it has received from
its actuarial consultant - in this case, Mercer Human Resource
Consulting. The board then acts upon that consolidated
contribution rate. He stated that he has found the actuarial
science interesting, and that information is what the board must
rely on. He said, "That is about the only area of
responsibility in the financial end that we would have any say
in." He predicted the experts that Representative Kelly wants
on the board would get bored "sitting there listening to a lot
of disability appeals."
9:25:42 AM
MR. WELLINGTON said the board also advises the administration on
health insurance for retirees; however, that program is solely
the responsibility of the commissioner of administration, who
has the sole authority to make whatever changes to the health
insurance he/she feels appropriate. He recognized that the
largest current under funding is within the health insurance
component. He said that the board has worked with the
administration over the years to attempt to reduce costs. He
said there is a health insurance subcommittee made up of two
members from PERS and two from TRS, and he has sat on that
subcommittee for the last 10 years. He noted one of the money-
saving ideas that has been instituted with the administration
has been the use of generic drugs and "an educational process,"
which he indicated has resulted in an annual savings of about $1
million. He indicated that health insurance may rank even
higher in importance than the paycheck to most retirees.
9:27:49 AM
MR. WELLINGTON concluded by reiterating that it isn't necessary
to put people on the board with expertise as [proposed in the
bill], because "that's really not the area that this board deals
in."
9:28:21 AM
CHAIR SEATON, regarding the board setting the contribution
rates, asked Mr. Wellington if he would find it problematic if
the legislature were to establish a floor that the board could
not drop below.
9:29:08 AM
MR. WELLINGTON answered no. He indicated that a number of years
ago the PERS board made recommendations for a ceiling and floor.
He said the [TRS board] doesn't "have that same provision." He
said he thinks the ceiling is a good provision. Mr. Wellington
said he thinks there has been some misconception that the PERS
board has reduced the actuarial rate below what has been
recommended by the consultant. He emphasized that the board has
never done that, but has, in fact, set the rate higher than
recommended. He explained, "We were trying to maintain about
100-102 percent funding for PERS and, had we adopted the rate as
recommended by the administration at Mercer, we would have
dropped below that. And it was a collective decision of the
board not to do that."
9:30:26 AM
CHAIR SEATON said the committee is not familiar with how the
board works, and he indicated that he appreciates knowing that
90 percent of the board's time is involved in disability
appeals.
9:30:39 AM
MR. WELLINGTON noted that the board also does some
administrative appeals. He offered an example. He said he
thinks that that appellants who come before the board feel that
they will get "a fair shake."
9:31:31 AM
REPRESENTATIVE RAMRAS recognized the service of Mr. Wellington
and of the late Robert Boko, "a spiritual, powerful member who
left an extraordinary mark on the ... TRS board." He asked Mr.
Wellington to list the governors under which he has served.
9:32:40 AM
MR. WELLINGTON listed Governors: Jay Hammond, Bill Sheffield,
Steve Cowper, Walter Hickel, Tony Knowles, and Frank Murkowski.
9:32:59 AM
REPRESENTATIVE RAMRAS remarked that Mr. Wellington has seen the
PERS fund living and breathing for many years.
9:33:35 AM
MR. WELLINGTON said comments are made that "we probably couldn't
invest our way out of the predicament that we're in today," but
he said he thinks it's important to look at the whole picture.
He said when the board considered a hybrid program in the past,
it was basically told to stay on track. He said he thinks a
better approach would have been to look at the whole system and
to conduct a study to consider the medical portion of the
program. He said the state's participation in the SBS program
costs about $40 million per year, and perhaps there could be
some reduction in that. He mentioned near-term, mid-term, and
long-term results, and said he looks at defined contribution as
a long-term [solution]. Mr. Wellington said, "I think a better
approach would have been to study this, look at what's
available, and then recommend the changes." He said he did not
feel comfortable in recommending a "title only-type situation."
He said, as a former law enforcement officer, he would not "sign
off" on anything he had not had the opportunity to study in
detail. He admitted that he may be overcautious, but said he
has seen those who are not [cautious] get into trouble. He said
he thinks the board would support a change, but not until it
sees "what it would look like."
9:37:08 AM
MR. WELLINGTON, in response to a question from Representative
Ramras, spoke of his former career in law enforcement. He noted
that he also sits on the Alaska State Pension Investment Board
[ASPIB].
9:37:30 AM
REPRESENTATIVE RAMRAS asked Mr. Wellington if the PERS board is
looking out for the worker or the institution.
9:38:20 AM
MR. WELLINGTON responded that the board looks out for the system
and the worker. He said, "We're a finder of facts, and develop
the facts as presented. We do take in ... - through
consideration - the evidence that the worker brings forth to us,
but the bottom line is that our decisions have to stand the test
of time, because there is an appeal process." He noted that,
since he's been on the board, [both] the state [and] the
appellant has had the right to appeal to the superior court. He
offered further details. He said he knows a lot of people in
Alaska, but doesn't let that interfere with his work.
9:39:40 AM
CHAIR SEATON asked Mr. Wellington to describe the differences
between the PERS and TRS Boards.
9:39:54 AM
MR. WELLINGTON said the TRS Board includes certified teachers
and deals only with occupational disability, while the PERS
Board addresses both occupational and non-occupational
disability. He said historically there have been two separate
boards, and their constituency is a little different. He noted
that the TRS Board is not as busy, because they don't have the
same amount of appeals. He said the boards could be combined if
the new single board was made bigger; however, he said he
doesn't know that "bigger is always better." He indicated that
the current boards function well and "it doesn't cost a lot to
meet."
9:41:20 AM
MR. WELLINGTON, in response to a question from Representative
Ramras, noted that the [PERS] Board meets 4-5 times a year.
Appeals take up a vast majority of the meeting. The upcoming
meeting is scheduled to last four days. He offered an example
of a fireman working for the municipality who fell off a ladder,
but had preexisting conditions from a football injury. The
board decided that falling off the ladder was not sufficient
cause for disability, but the court told the board to reconsider
the case under more liberal interpretations, whereby the fireman
was given the disability. He offered more examples. He said,
"Every once in awhile the system has to step up to the plate and
say, 'We made a mistake.'"
9:44:39 AM
CHAIR SEATON offered his understanding that every member of the
current board has been employed at one time with PERS.
9:44:49 AM
MR. WELLINGTON noted that Bronk Jorgensen has never been in the
system. He said the governor can appoint whomever he/she wants.
He said being a board member is a time-consuming job; for every
day spent in hearings, hours are spent at home in preparation,
without compensation.
9:45:48 AM
CHAIR SEATON offered his understanding that currently there are
no PERS employers represented [on the board] from municipalities
or school districts.
9:46:02 AM
MR. WELLINGTON said, "Not currently."
9:46:07 AM
CHAIR SEATON asked Mr. Wellington if he would think it a
positive move toward diversity of opinion if there was a
requirement for "some participation by an employer within ...
PERS."
9:46:17 AM
MR. WELLINGTON responded that he thinks that would be good,
because people don't feel they have a voice at the table.
CHAIR SEATON, in response to a request by Representative Ramras
and the ensuing remarks by Mr. Wellington, suggested that a
biography of each of the PERS Board members could be provided to
the committee.
9:51:36 AM
JAY DULANY, testifying on behalf of himself, noted that he is a
member of the Retired Public Employees Association (RPEA). He
stated that it would be difficult to improve on the current
makeup of the boards, and keeping those with experience in the
system off the boards would be unwise. In particular, he said,
removing the ability to elect the two members on the PERS board
"kind of flies in the face of our representative democracy."
Furthermore, he stated his belief that the TRS board should be
changed to allow two elected members. Regarding having an
employer on the boards, he said the governor certainly could
appoint an employer; however, he doesn't see a problem with
specifying that an employer be on the board.
9:53:09 AM
KEVIN RITCHIE, Alaska Municipal League (AML), mentioned a recent
meeting that had taken place. He stated that about 63 percent
of PERS and TRS systems are in schools, municipalities, and the
university. Currently, he noted, there is no structural
connection between those three to the program, so "this is a
program which is obviously key to employers." He said it would
certainly be reasonable to add seats.
9:55:09 AM
MR. RITCHIE, in response to a question from Chair Seaton
regarding combining the two boards, said AML has been meeting
for about six months, and that issue has not been addressed. He
stated his personal experience with "this board" is that it has
a very open system. For example, he said several months ago AML
was invited to the table to work through the Mercer information.
He concluded, "I do agree that the boards are functioning very
openly [and] very well right now."
9:55:59 AM
SAM TRIVETTE, President, Retired Public Employees of Alaska
(RPEA), revealed that his involvement with RPEA began in 1998.
He said RPEA represents thousands of the ten thousands of
retirees from PERS, TRS, and other public retirement systems,
and opposes the proposed legislation for a number of reasons.
He paraphrased his written testimony as follows:
For all of the public members the governor has the
authority to appoint, this bill would, for no good
reason, exclude well over 50,000 Alaskans from being
considered for the positions, just because they have
at some time in their lives, worked for a public
employer. Furthermore, the bill excludes numerous
other Alaskans from appointment that have significant
public sector experience - but not private sector
experience - in administration, financing, accounting
or economic development.
Not having seen a [sponsor's] explanation of the bill,
it is unclear to me what the purposes of these
sections were. Having attended numerous PERS & TRS
board meetings in the last 5 years, ... I understand
what their duties and responsibilities are and what
they spend most of their time on. A majority of the
[board's] time is spent hearing appeals from members
of the system. The board members need to be very
familiar with Alaska employee and retiree laws &
benefits, and how the system really works.
Let me say that [in] my observations of current and
past PERS/TRS Board members at their meetings in the
last half decade, an observer would not know who was
elected, who was appointed, who was a former public
employee or not, based upon their comments and actions
at the meeting. They all understood their statutory
and fiduciary responsibilities, no matter what the
issue was. I would add that the members without
public employee experience tended to lean upon board
members with the public employee experience to effect
the best possible outcome for the state and any
individuals involved.
The boards have a history of fair and equitable
hearings. Many potential court appeals are avoided,
as employees and retirees are more accepting of even
adverse decisions when they know the board members
understand the system and the appellant believes they
are getting reasonable consideration.
Clearly, having board members with public employment
experience has enhanced the ability of the state to
make many changes to the retirement benefits system
that has resulted in many millions of dollars of
savings in recent years. Without [the] excellent
cooperation of the current [Division of] Retirement &
Benefits staff ..., retired PERS and TRS board
members, and RPEA volunteers, the fund balances would
be in much worse shape today.
... I'm assuming this bill does not tamper with the
two ... elected ... PERS Board members, and I think if
it were to tamper with that ... you would find
yourself in a potential diminishment of benefits
situation, which, if that were the case, ... would
certainly be subject to legal challenges.
I've worked with organizations for over 40 years ....
In spite of individual PERS and TRS Board member
views, I've not seen a group - even with changes over
time and many new board members of the last 2-plus
years - that has better served the interest of ... all
of the citizens of Alaska. They are efficient - they
use their time wisely; they are effective - they find
ways to contain and reduce costs; and the are beholden
to no one - including employers, retirees, [the
Division of] Retirement & Benefits, [and] consultants.
10:01:18 AM
MR. TRIVETTE, regarding combining the two boards, said he is not
an expert but has spent time talking with TRS Board members. He
pointed out that PERS and TRS statutes were enacted at different
times and the boards have different types of teachers. In terms
of how the money is paid out of the system, TRS and PERS are
quite different; the average payment for PERS is approximately
$1,500, while the average payment for TRS is $2,500. He noted
that many of the university employees fall under PERS, rather
than TRS. He said he doesn't want to tell the committee members
that it would be impossible to combine the two boards, but he
suggested they withhold judgment and raise those questions with
some of the other PERS and ... TRS board members that would be
in town next week. He also suggested that the committee speak
with some of the former members of the PERS and TRS boards; he
estimated there are probably five or six members that have been
replaced in the last couple of years. Another person of note,
he said, would be the board attorney, who is not a member of the
board, but has been working with the board for many years.
10:02:55 AM
CHAIR SEATON recognized that Representative Mike Kelly, sponsor,
had just joined the committee. After discerning that
Representative Kelly did not wish to add further testimony at
this time, he closed public testimony.
10:03:45 AM
CHAIR SEATON announced that the House State Affairs Standing
Committee draft for a PERS/TRS bill should be read across the
House floor today or tomorrow. He discussed further calendar
issues.
ADJOURNMENT
There being no further business before the committee, the House
State Affairs Standing Committee meeting was adjourned at
10:04:13 AM.
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